“The Lady Case”...As the globalisation process evolves and grows stronger, the increasing...

“The Lady Case” By Christina Hardegård

Master guidance councilor: Toke Reichstein Associate Professor Department of Innovation and Organizational Economics

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Christina Hardegård “The Lady Case” CBS 2009

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Executive Summary

Today’s increasing internationalisation breeds a stronger need to be able to analyse and

evaluate the possibilities of a new business idea from multiple perspectives to really

understand the true risks and potentials of the concept in question. This paper explores the

potential to strengthen entrepreneurship by utilizing systematic business plans. More

specifically it strives to discover how viable and defendable the Lady Case, a designed casing

for sanitary napkins and tampons for women to carry in their purse, is as a business concept

and if it is capable to sustain a newly started entrepreneurial company in the long run.

The concept has been analysed employing William A. Sahlman’s framework on how to write

a business plan1 supported through empirical findings following both a quantitative and a

qualitative investigation of the potential consumers of the product. The positive response from

the applied surveys, great global sales and growth potential of the Lady Case in combination

with large profit potentials and positive financial projections confirm the viability of the

concept. The access to a large customer base, good logistics and the design of the casing has

been identified as they key drivers for success.

Due to the high risk of competitor entrance and the poor defendability of the product it can be

concluded that even though the viability carries very high potential, the concept holds too

much risk to be a sustainable solution in the long run for a start-up venture. Though, since

only two of Sahlman’s four cornerstones where investigated, the author raises questions if

“the people” and “the context” could have altered the outcome of the investigation2.

Furthermore, Sahlman’s framework provides the important questions that need to be

answered; however it does not offer all the tools to answer them which are why further

research into this area is suggested.

Applying Sahlman, the Lady Case investigation has revealed the importance of truly

understanding all the factors, both internal and external, that can impact and alter the results

of a new launch and it can perhaps help change the way entrepreneurs perceives their real

opportunities.

1 Sahlman, How to write a great business plan, 1997 2 Sahlman, How to write a great business plan, 1997


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Table of Contents

Executive Summary ................................................................................................................. 2 Introduction & Focus ............................................................................................................... 5 Problem Formulation ............................................................................................................... 6 Method ....................................................................................................................................... 6

Focus & Summary of Method ................................................................................................ 6 Methodology .......................................................................................................................... 7 Research Design ................................................................................................................... 10 Delimitations ........................................................................................................................ 10 Focus .................................................................................................................................... 10 Method of Data gathering .................................................................................................... 12

Theoretical Base ....................................................................................................................... 22 Focus & Summary of the Theoretical Base ......................................................................... 22 Literary Review .................................................................................................................... 23 Theoretical foundation - Sahlman ........................................................................................ 25

The Opportunity of the Lady Case concept ......................................................................... 29 Focus & Short summary of the Opportunity analysis .......................................................... 29 The General Market & Industry Structure ........................................................................... 29 Customer segmentation & Findings of quantitative survey ................................................. 33 Market strategy – the 4 Ps .................................................................................................... 39 The Product .......................................................................................................................... 39 The Place .............................................................................................................................. 40 The Price .............................................................................................................................. 44 The Promotion ...................................................................................................................... 51 Financial projections ............................................................................................................ 52 Summary of the Opportunity analysis .................................................................................. 58

The Risk & Reward of the Lady Case concept .................................................................... 60 Focus & Short summary of the Risk & Reward analysis ..................................................... 60 Concept Viability in relation to Risk & Reward .................................................................. 60 Risks & Reward - Defendability .......................................................................................... 62 Summary of the Risk & Reward analysis ............................................................................ 69

Findings & Further discussions ............................................................................................ 71 Focus & Summary of the Findings & Further discussions .................................................. 71 Findings ................................................................................................................................ 71 Discussion of Delimitations ................................................................................................. 72 Post project perspectives ...................................................................................................... 73 Discussion & Further research ............................................................................................. 74

Bibliography ........................................................................................................................... 77 Appendix A - Quantitative Survey ........................................................................................... 81 Appendix B – Qualitative interview questions ........................................................................ 84 Appendix C – Summary of qualitative interview ..................................................................... 84 Appendix D – Workshop pre-session notes ............................................................................. 85 Appendix E – Summary of workshop discussion .................................................................... 88 Appendix F – Result of quantitative survey ............................................................................. 90 Appendix G – Partial customer segmentation analysis ............................................................ 94 Appendix H – Prototype picture ............................................................................................... 97 Appendix I – Price level 50 & 75 discussion ........................................................................... 98 Appendix J – Marketing budget plan ....................................................................................... 99


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Appendix K – Cash needs year 1 ............................................................................................. 99 Appendix L – Cash flow ........................................................................................................ 102 Appendix M – Income Statement ........................................................................................... 103 Appendix N – Balance Sheet ................................................................................................. 104 Appendix O – SWOT ............................................................................................................. 106


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Introduction & Focus

This paper explores the potential to strengthen entrepreneurship by utilizing systematic

business plans. More specifically the essay strives to discover how viable and defendable the

Lady Case is as a business concept and if it is able to sustain a newly started entrepreneurial

company in the long run.

As the globalisation process evolves and grows stronger, the increasing internationalisation

breeds a higher need to be able to analyse and evaluate the possibilities of a new business idea

from multiple perspectives. This is done to really understand the true risks and potentials of

the concept in a multidimensional way. Failure to adapt to the dynamically changing

environment might create great losses fast, or worse, totally disrupt the business permanently.

The Lady Case is a designed casing for women to carry sanitary napkins and tampons in their

handbags. The accessory casing protects against the package deterioration and keeps it

discreet in the purse. The Lady Case launch/concept will be analysed employing William A.

Sahlman’s framework on how to write a business plan3 supported through empirical findings

following both a quantitative and qualitative investigation of the potential consumers of the

Lady Case. To further support the analysis other frameworks, such as Smith & Smith4,

Brealey et al5 and Kotler6 will also be utilized. As Sahlman articulates in his paper; we live in

the golden age of entrepreneurship, though in today’s economy few ideas are truly

proprietary. This is why a plan must demonstrate mastery of the entire process; it is not a way

to separate unsuspecting investors from their money but a way to protect not only the investor

but also the entrepreneur from making bad decisions7. The investigation of the Lady Case

concept reveals how vital it is for the entrepreneurs and potential investors to truly understand

all the factors impacting the result of a new launch.

Considering the research design of this paper, the first part will clarify the objective of the

project, how it was planned, designed and executed and with which limitations this was done.

It will shed light on the methods of data gathering employed to support the analysis and

3 Sahlman, How to write a great business plan, 1997 4 Smith & Smith, Entrepreneurial finance, 2004 5 Brealey et al, Fundamentals of corporate financing, 2004 6 Kotler, Marketing Management, 2003 7 Sahlman, How to write a great business plan, 1997, P.108

Christina Hardegård

findings. This part will also give an overview over a large part of the

field of entrepreneurship and business plans. Furthermore

theoretical foundation of the study will be outlined to enhance the understanding of the

analysis and its conclusions.

product idea, the market and the

going into the more specific analysis of issues like customer segmentation, product idea

relation to the end-user, feasible

strategy and promotion potential.

supply the investigation with information to be able to evaluate economical issues

surrounding the possible production and sales of the Lady Case. In the later part of the second

section risk and rewards are assessed

and defend on the market. Finally, based on the findings from the analysis

been drawn and further research and considerations have been reflected upo

Problem Formulation

Employing Sahlman’s framework

how viable and defendable the Lady Case is as a bu

is capable to sustain a newly started entrepre

Method

Focus & Summary of Method

This section clarifies how the research was app

how the data collection was planned and executed.

secondary sources were employed

gather as much relevant information as possible regarding the product, both a quantitative and

“The Lady Case”

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will also give an overview over a large part of the literature

field of entrepreneurship and business plans. Furthermore, the frameworks used as


The second part first takes a helicopter v

product idea, the market and the industry situation. This provides a sound foundation before

into the more specific analysis of issues like customer segmentation, product idea

, feasible product specifications, distribution possibilities, pricing

otential. Furthermore, financial calculations have been produced to



isk and rewards are assessed to ascertain if it is a feasible product to

Finally, based on the findings from the analysis

been drawn and further research and considerations have been reflected upo

s framework concerning business plans this paper strives to discover

how viable and defendable the Lady Case is as a business concept and if the realised concept

to sustain a newly started entrepreneurial company in the long run.

Focus & Summary of Method

how the research was approached, which limitations that applies

how the data collection was planned and executed. Summarizing, both primary sources and

were employed to collect data for this project. Furthermore, in an effort to


CBS 2009

literature covering the

the frameworks used as the


The second part first takes a helicopter view of the general

d foundation before

into the more specific analysis of issues like customer segmentation, product idea in

specifications, distribution possibilities, pricing

calculations have been produced to



to ascertain if it is a feasible product to be able to sell

Finally, based on the findings from the analysis, conclusions have

been drawn and further research and considerations have been reflected upon.

concerning business plans this paper strives to discover

siness concept and if the realised concept

ial company in the long run.

roached, which limitations that applies and

both primary sources and

Furthermore, in an effort to



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a qualitative survey was made in Copenhagen, where randomness and validity of the

questions have been confirmed. Inductive reasoning following Knudsen8, and heuristic

methods put forth by Polya9 has been utilized when approaching the research. Due to the

scope of this project “the people” and “the context” were deselected and “the opportunity”

and “the risk and reward” sections of Sahlman’s framework thoroughly investigated.

Methodology

The viability and defendability of the Lady Case concept is studied trough a business plan,

because understanding if it is a concept that is good and unique enough to be able to sustain a

newly started entrepreneurial company is sought. This is done in order to help readers

understand the multitude of issues influencing and altering the true profit potential of a

product launch for an entrepreneur and so that readers can better evaluate the true worth of a

new product concept. Defining the research problem in this paper did not follow the same

procedure as when forming a research question where the general topic is first found, then the

overall literature is scanned to find what is known and not known and a research gap can be

identified. Thereafter the research question is created based on this and empirical research that

can help answer the bigger picture planned for10. With this project the research problem was

already known when scanning the literature, and it was focused on finding the most

appropriate theories to help answer the question posed in a truthful and reliable way. The

problem formulation of this paper is not a research question in its purest form referring to

only understanding an issue; it is an applied problem formulation where it refers to not only

understanding something new but also what can be done with the answer11, e.g. can the

product be launched successfully by the entrepreneur. The problem posed in this paper still

allows for empirical studies and research that can be applied further than the scope of this

project making it a viable problem to investigate.

To collect data for this project both primary sources such as a surveys, workshops and

telephone interviews, and secondary sources, such as books, articles and the internet, were

employed. The theoretical foundation of this paper was created through conducting a literary

review of the field of entrepreneurship. The review was performed in different stages, first a

8 Knudsen, Økonomisk metodologi, 1991 9 Polya G, How to solve it, 1945 10 Booth et Al, The Craft of Research, 2003 11 Booth et Al, The Craft of Research, 2003


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broad scan of the field of entrepreneurship and business plans were made employing the CBS

library search engine and the internet. Following this, colleagues and members of the faculty

were consulted as how to best locate relevant theories and frameworks buried in the vast

supply of information. Since there are no real “superheroes” in this field of research the

search of theories was based on reputation and recognition among the faculty staff and origin

of support to the frameworks offered; in this context the support of a well-reputed university.

Due to its reality oriented perspective, Sahlman’s12 framework concerning the business plan

was chosen as base to attempt to shed light on the problem presented in this paper.

Furthermore, the theories of Smith & Smith13, Brealey14 and Kotler15 were chosen as

supplements to be able to delve deeper into the issues involved.

The analysis was built based on analytical research and quantitative and qualitative

investigations. Furthermore, a more inductive reasoning, following Knudsen16, was exercised,

supported by the evidence in the case, to attempt to formulate and draw conclusions about the

future unknown. The approach of inductive reasoning connote that a sample of empirical

evidence can give you a general picture of the situation and a “singular truth” as long as the

number of observations are large enough17. In this project the inductive logic has been

employed when analysing the results of the survey and how it relates to the context of the

situation. This has helped to understand the wants and needs of the consumers and has been

used as base for deducing if the Lady Case opportunity is a viable business concept. However,

this method does create a bias since, in reality, not everyone is the same and generalisations

made, based on the test group will not be 100% representative since not every woman in

Denmark or the world has had their say. Interviewing every woman in the country is

obviously not a feasible scenario, which makes the inductive reasoning employed based on

the quantitative and qualitative surveys the next best thing. The side effect of a potentially

skewed result is an important point to remember. It is also important to note that the

observations made in this project are to some degree subjective, though applying theory like

that of Czaja & Blair18 or Blaxter19 should work to alleviate this problem somewhat.

12 Sahlman W.A, How to write a great business plan, 1997 13 Smith & Smith, Entrepreneurial finance, 2004 14 Brealey et al, Fundamentals of corporate financing, 2004 15 Kotler, Marketing Management, 1991 16 Knudsen, Økonomisk metodologi, 1991 17 Knudsen, Økonomisk metodologi, 1991 18 Czaja & blair, Designing Surveys, 2005 19 Blaxter L, How to research, 2006


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To support the products development and to attempt to create more optimal solutions to the

challenges presented in the project, a number of heuristic methods put forth by Polya20 were

employed. Heuristic techniques are experience-based and consist of a set of “common sense”

rules used to increase the probability of finding a “best-fit” or “optimal” solution to a

problem21. One of the most utilized heuristic methods in this paper is where a drawing is

made of a problem to better understand and solve it. This was done when trying to better

comprehend the different possibilities of structure and focus of this project. To visualise it

through depicting different scenarios and focal points really helped to put together a clearer

more goal oriented frame for this paper. This approach was furthermore used in the workshop

to illustrate problems with design and functionality, this facilitate a better explanation of what

the women really wanted and liked in a product and conversely what they did not want and

like, leading to a more streamlined and correct product offering. When considering possible

scenarios for distribution another heuristic method was put to the test, where the solution is

assumed and from there on work backwards and find what can and cannot be done. This

showed the potential of the Lady Case, but also its weakness. Abstract problems is also

commonly seen in projects of this character, and endeavouring to avoid this concern an effort

has been made to keep the problems and examples concrete and tangible throughout the

paper.

To attempt to ascertain accurate answers in relation to the research question posed in this

paper, conclusions were drawn from the analysis, which in itself is based on extensive use of

primary sources and up-to-date information. Finally the implications of the results for the

project in relation to its future were considered and further points of research looked upon.

20 Polya G, How to solve it, 1945 21 Polya G, How to solve it, 1945


Research Design

The research design can be visualized

The research design of the paper The sequential design as

Delimitations

Focus

Due to the scope of this project only 2

this project. “The people” and “the context” was deselected in favour of “the opportunity” and

“the risk and reward” sections since it was deemed more important to first establish if the

opportunity in itself was something that could be sustainable in the long run. It was also

considered important to truly understand the product, its strengths, weaknesses and overall

“The Lady Case”

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visualized as follows:

The research design of the paper The sequential design as illustrated

Due to the scope of this project only 2 of Sahlman’s 4 cornerstones have been investigated in



something that could be sustainable in the long run. It was also


CBS 2009

The research design of the paper The sequential design as in the text

s 4 cornerstones have been investigated in



something that could be sustainable in the long run. It was also



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potential before being able to answer if it is the right people that are managing the venture or

if the context could hinder or help the idea.

Data collection

The data collection in form of the quantitative and qualitative surveys has been based on the

Danish market. Furthermore the restraints in terms of time and budget did not allow for larger

more in-depth surveys which could have given a broader overview of the preferences of the

population. The interviews performed were done in Danish meaning that the surveys were

converted from English to Danish. Multiple persons, herein a bi-lingual colleague, were

drawn upon to attempt to minimize the potential of translational errors. Summary transcript

was used as base for the analysis; this shows the context better but might have distorted the

information slightly due to some loss of details.

The workshop was executed later than the quantitative survey and after the launch of a similar

product by Libresse (the quantitative survey was done pre-launch). The participants were

explained that it was a discussion about the product idea itself and its function, which still

would give important information as to the partiality of the women with regard to design and

functionality. The fact that some of the participants had seen the product idea before probably

facilitated a better understanding and communication of important preferences, but it would

also give them a pre-constructed image of what to expect. It is also important to note that for

the qualitative workshop investigation the author was in the same acquaintance sphere as the

participants which could have affected the outcome either in a negative way, inhibiting

disclosure of the true feelings towards the product or in a positive way where the participants

felt safer with a known moderator and was more open in their views.

Author partiality

The author of this project is also the carrier of the product idea and this could have affected

the outcome and conclusions of the product due to the natural bias created. However, the

author has endeavoured to relay the situation in a fair and equal way and has strived to remain

as impartial as possible.


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Method of Data gathering

When gathering empirical evidence for the case, considerations were made whether to use a

more qualitative or quantitative approach. In the end, in an effort to triangulate and gather as

much relevant information as possible regarding the product, a mixed approach was chosen.

Endeavouring to assemble a good basic understanding of the customers and their general

attitudes towards a product idea like the Lady Case a quantitative survey method was

employed. This was done due to its ability to give a generalized result and broader

representation when done correctly. Furthermore, a survey can also be repeated in the future

for comparison. It is also a method that can be managed by few people with a limited time-

frame and a strict budget, as in this case. However it is recognised that a survey relies on

breadth rather than depth for validity and matters of accuracy and truthfulness of the

respondents, especially when the subject is of a more private nature, are critical issues. 22

With this in mind a survey was created utilising several researchers’ findings to attempt to

minimize errors and authors biases.

To complement the information gathered from the survey, and to acquire more in-depth

knowledge regarding consumer preferences concerning product attributes and sales potential,

a small workshop in the form of a test-panel was arranged drawing upon mixed elements of

quantitative and qualitative techniques. With this type of study it is harder to generalise the

result and is difficult to repeat in exactly the same way for future comparison. With the

qualitative method this cannot be done. However this manner should give much more specific

and solid information regarding the preferences towards the product itself and give indications

as to what the market really wants in relation to design, etc. In addition to this a qualitative

interview was conducted to acquire more detailed information regarding patents and product

rights which would be very difficult to gather through a quantitative interview. As with the

quantitative survey, several researchers’ frameworks were investigated and employed in an

effort to minimize inaccuracies and errors when employing the qualitative techniques.

22 Blaxter L, How to research, 2006


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The Quantitative Survey

According to Czaja & Blairs’ framework for creating surveys there are five stages that need to

be pursued.23 The first stage emphasises the need for preliminary planning and survey design.

Here the method of data collection for the survey was decided upon. Considering the costs

involved, the subject availability, the facilities at hand and the length of data collection, the

method of personal interviewing was selected.24 An outline of the survey questions was also

prepared, it consisted of standardised, mostly closed questions to increase consistency and

verifiability of the answers received.25 When creating the questions the research problems

where used as base as to what needed answering. Furthermore Kotler’s book on Marketing

Management26 and Denmark’s Statistics (Danmarks Statistik)27 was consulted to get a

general understanding of the information needed to properly segment possible customers in

the future. Other surveys were sometime used as templates28 for a number of the questions to

attempt to achieve a higher general understanding for the sample group. The number of

answers, possible outcomes and symmetry of the questions were also considered when

creating the survey. The different needs of information in this survey made symmetry difficult

to balance. In the end some questions, where a wider range of information was focal, did not

follow the pattern and in some cases the number of choices was curtailed to achieve some

symmetry. This could have made it somewhat more difficult for respondents answering the

survey. The placement of the personal sensitive questions was also considered thoroughly.

Here the fear of influencing the answers too much overruled the worry of getting no answers

due to a too early placement in the survey. The questions were not given a “do not know”

answer-alternative, the reasoning being that an interviewer would be in place to answer any

questions the test-subjects might have and that the survey is dependent on the subjects taking

a stand be it positive or negative.

Following this the questions that had been prepared were screened for reliability, validity, and

complexity. This screening of questions, McNamara stresses, is of focal importance when

designing a viable survey.29 When considering the preliminary sampling frame the aim of the

23 Czaja & Blair, Designing Surveys, 2005 24 Fowler F, Survey Research Methods, 1988 25 Fowler F, Improving Survey Questions, 1995 26 Kotler, Marketing Management, 2003 27 Danmarks Statistik, E-recourse, 2009 28 Createasurvey & Surveyshare, E-resources, 2009 29 McNamara, Article, E-resource, 2008


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survey was taken into account. The target group was defined as consisting of females between

the age of 12 and 65 (12-50 most interesting), since this is the time-frame a women is most

probable to be fertile and thereby using the protection-products that the Lady-Case would

carry.30 The sample frame would be a non-probability sample of consensus data31 consisting

of the women passing by the stores of Netto (at Amagerbrogade 235, 2300) & Kvickly

(Engladsvej 28, 2300) and the women-only Fitnes.dk training-centre in Taastrup (City 2). The

sampling was decided to be systematically random, meaning in this case that for every woman

surveyed two would be allowed to walk by.32 The time of the tests was planned to be executed

between 15.00 and 18.00 during three days in week thirteen. This time frame might twist the

representation somewhat since there probably are different groups shopping at different times,

e.g. mothers on maternity leave might shop during the day and avoid the rush-hours.

However, the time interval chosen should give a maximum of walk-bys and the limited

resources of this project did not allow for a longer period of testing. It is further noted that the

locations are all within the city limits of greater Copenhagen, which could skew the result of

the survey somewhat, since the mindset of the city and the countryside can differ. The rate of

product adaption is usually higher in a metro area than compared to the rural regions in a

country33. This is mostly due to more influence from a larger more diverse population in the

cities meaning that the amount of exposure to new ideas are much larger which leads to a

higher speed of change. Again the different locations were chosen to attempt to reach as large

a spectre of the population as possible within the frames of the budget for this assignment.

The second stage of Czaja & Blairs’ framework refers to pretesting.34 Here a screening of

questions was done through a pilot test using three test subjects to attempt to avoid possible

validity and complexity issues in the actual test phase. The test found an inconsistency in the

“income-alternatives” and the text in the product description was altered somewhat to

enhance understanding. The interviewer (the author) employed self-studying through

extensive reading to attempt to limit the biases and interference she might have on the survey.

Restricted recourses made it difficult to accomplish more in-depth pre-testing which adds a

weakness to the trustworthiness of the result. However, the end results have been tested for

validity to enhance reliability. The third and fourth stage in building the survey is the final

30 Netpatient.dk, E-resource, 2009 31 Czaja & Blair, Designing Surveys, 2005 32 Fowler F, Survey Research Methods, 1988 33 Burns, Entrepreneurship & small business, 2001 34 Czaja & Blair, Designing Surveys, 2005


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design and planning and data collection process. 35 Following this, the survey questions were

finalised and the sampling plan developed further.

A sample size of 80 was set as target. The sample frame problems that could arise from the

chosen set, among other, is that it is not a large enough sample making the coverage weak or

that the settings chosen attracts a specific type of crowd distorting the results. A third problem

can be that too many respondents do not fit the relevant segment, e.g. they can be too young,

too old, etc. To try and alleviate part of these problems multiple settings were chosen and a

new target of 100 was set to be interviewed. To try to ensure truthful answers to sensitive

questions, confidentiality for the respondent was stressed in the survey. Please see final

survey questionnaire in appendix A. The data was then collected in the given locations,

following the sampling and operations plan. However, the original plan did not yield enough

results leading to the use of an additional site, the Copenhagen Business School, for one

afternoon in week 14.

When conducting the survey, some issues were encountered concerning the precise meaning

of the question regarding need; some needed assistance to properly understand the question. It

seems that the use of the word “indifferent” and the fact that other buy options were suggested

caused some confusion. The question was clarified, explaining that the first alternative should

be chosen if other versions/designs of this product or very similar, related products could

solve the problems just as well as the original. The second alternative should be chosen if the

consumer is indifferent to the design, size and form of the casing. That is if the consumer

thought that also unrelated products could solve the problem for them just as satisfying as the

products designed for it. And the last alternative should be chosen if the product idea was

uninteresting to the consumer. Due to the issues concerning the understanding of this

question, its importance in the analysis has been downplayed and the link between irritation

and interest has instead been put in to focus.

35 Czaja & Blair, Designing Surveys, 2005


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The end result was produced as in the final stage of the Czaja & Blairs’ outline36. That is the

data was cleaned, reduced, checked for quality and validity. During the cleaning one of the

responses was completely deducted due to respondents not corresponding to the sample-

frame. When performing the chi-square test, if the number of answers between the two

variables were different the survey sheet missing answer to one was also deducted from the

other to keep the balance within the table.

Reliability of the Survey

The final number of respondents added up to 93 and the non-respondents, in this case, was 19.

The non-respondents age was assessed by the interviewer and the Chi-square “test of

independence37” was applied to assess dependence. With 3 degrees of freedom (DgF) the

maximum sum for 95% certainty is 7,815 and the respondent/non-respondent sum was found

to be 2, 3 meaning that there is no dependence between the variables and the sample is

considered random38. It should be noted that the sample size is at times somewhat smaller

than the chi-square recommends for its tests, however it was the method found that would

give the most accurate representation of the dependence between the variables and was

therefore employed in this project. To attempt to verify valid logical fit, questions 11, 12, 14

and 18 investigating irritation, interest, need and possible usage, were compared to check if

the answers followed reason. It should follow that if there is a product idea that can solve

some irritation there should be some interest and need to resolve it. If a need is discovered

there should also be a perceived potential for usage. It was found that question 11 & 12 (DgF:

1, sum: 13, > 3,841 is dependant) was interdependent. The same strong connections was

found between questions 11 & 14 (DgF: 2, sum: 30, 9, >5,991 is dependant) and 14 & 18 (1

degree of freedom, sum: 74, 1, >3,841 is dependant). This means that a logical fit was found

between these queries when investigating the matter. The chi-square was also employed to

help define and test the possible target groups for the Lady Case product as can be seen in the

market strategy section.

36 Czaja & Blair, Designing Surveys, 2005 37 Lind et al, Basic statistics for business and economics, 2008 38 Chi Square Statistics, E-resource, 2009


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Table 1: Age statistics39

Comparing the age data collected with the survey to the statistics of the population spread of

Denmark in 200840, as seen in table 1, it is evident that there are some deviations. There are a

much larger percentage of females aged 21-35 figuring in the survey than is statistically

normal in the real world and reversely the representation of 51-65 and 12-20 are less than

could be expected. This abnormality can perhaps be explained somewhat by the locations and

times chosen for the survey interviews. The university location probably increased the

younger element somewhat in the survey and the time of day may have eliminated some of

the groups in society as discussed before. The age groups below 12 and above 65 were

excluded in the survey due to the constraints of the target audience. That the 51-65 are

underrepresented is not a real issue since they are a borderline group. The main interest of this

survey lies with the menstrually active or the ones about to enter this stage. This indicates that

an overrepresentation of the younger segment is of benefit since they are more of the intended

target audience. However, it would have been beneficial to the survey had the 12-20 been

fully represented, and this must also be taken into consideration when regarding the final

outcome of this study.

It is important to note that the interviews were done in Danish meaning that the surveys were

converted from English to Danish opening for the possibility that something could have been

lost in translation. Again multiple persons, herein a bi-lingual colleague, were drawn upon to

39 Danmark Statistik, E-resource, 2009 40 Danmark Statistik, E-resource, 2009

Age Survey DK Statistic

12-20 6,5% 15,4%

21-35 52,7% 26%

36-50 36,6% 30,4%

51-65 4,3% 28,1%


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attempt to minimize the effects of the translation. Finally the human element in conducting

the survey should also be considered further. A test of this size requires a lot of manual data

management and entry errors does occur. Endeavouring to minimize similar errors, the

information has been entered in small batches, and the data has been double-checked.

Inconsistencies and illogical patterns have also been checked for authenticity. Concluding the

survey, the results found was drafted into a final report where the main points can be found

under “Customer segmentation & findings of quantitative survey” in this paper.

The qualitative telephone-interview

To gather more in-depth information regarding product-idea protection and patents a

qualitative interview was performed in the shape of a telephone consultation with an

employee41 at the patent and trademark association. When preparing for this interview

different qualitative interviewing techniques were considered. Patton (1987) proposes three

approaches ranging from standardisation of questions to informal conversation for how to

conduct qualitative interviewing42. The guided interview approach was chosen since it is

focused but still an open and rather informal way of interviewing. A checklist with questions

and information necessary to derive from the interview was prepared. This requires some

groundwork to ensure that the questions do not lose focus or detail43. The questions (See

Appendix B) where planned as to allow the subject opportunity to elaborate and clarify

response. The interview was conducted over the telephone reducing the accuracy and validity

of the answers somewhat, mostly due to lesser proximity. It is easier to avoid a question or not

answer truthfully when the interviewer cannot be seen.44 Directly following the interview a

transcript summary was produced (see appendix C) excluding all irrelevant conversation such

as recurrences, pleasantries, etc. This was done in order to keep the focus on the key points of

the interview. Also here it is important to note that the interview was conducted in Danish so

there is a risk of translational errors. To minimize this possibility, as with the other studies, a

bi-lingual colleague was consulted when translating.

41 Klingenborg K, Telephone Interview, 26.03.2009 42 Education Online, Dr. Rita S. Y. Berry, E-resource, 2009 43 CNN, Methods of researching, reporting, note-taking and interviewing, E-resource, 2008 44 CNN, Methods of researching, reporting, note-taking and interviewing, E-resource, 2008


19

Focus Group Workshop

Different theories were employed to manage and support the process of planning and

execution of this focus group workshop. As base the guidelines deriving from Grover &

Vriens45 and MSH46have been applied. The first step according to said directive is to establish

the needs concerning the participants of the workshop, and then how to locate them. The

recommended number of participants in a focus group is between 6 and 1247, and for the

purpose of this workshop 8 was deemed appropriate, 2 women for each age group organized

as in the qualitative survey to keep consistency. Due to constraints concerning time- and

budget-frame the sampling group set was a mix between a convenience sample and a

judgment sample. This means that the sample group was chosen on grounds of accessibility

and prospect for accurate information48. The group selected was in the same acquaintances

sphere as of the author. However striving for impartiality, effort was made not to involve

subjects with too close relations to the author.

In the end, 3 neighbours, 1 mother of a friend, 1 sister of friend, 2 study colleagues and 1

work colleague was invited. The age group division following the same structure as with the

quantitative survey is as follows; 12-20: 1 neighbour and a 1 sister of friend, 21-35: 2 study

colleagues, 35-50: 1 neighbour and 1 work colleague, 51-65: 1 neighbour and 1 mother of a

friend. They were contacted via telephone and asked to partake in a 1, 5 hour long workshop

discussing an accessory product geared towards women. No monetary reimbursements for the

time spent was offered, however coffee and snacks would be served during the workshop.

Continuing to plan for the gathering following the method of Grover & Vriens49 a moderator

managing the focus group session must be appointed, preferably same gender as the focus

group participants. In this case the choice was quite simple since the author writes alone and it

was not deemed feasible to find someone better equipped within the frames allowed for this

study. However, as Grover & Vriens reminds us, the moderator must remember to adapt to

the environment, listen and control her own nonverbal reactions, be friendly, open-minded,

and unintimidating as a person. Continuing to elaborate on the biases the moderator needs to

be aware of when conducting the sessions, they especially point towards a problem called

“leadership-biases” where the group automatically follows a particularly strong or articulate

45 Grover & Vriens, The Handbook of Marketing Research, E-resource, 2009 46 MSH, Quality Guidelines for Focus Groups, E-resource, 2009 47 MSH, Quality Guidelines for Focus Groups, E-resource, 2009 48 Kotler, Marketing Management, 2003 49 Grover & Vriens, The Handbook of Marketing Research, E-resource, 2009


20

member of the group without voicing their own opinions50. With some discussion control and

“fingerspitzgefül” this can mostly be avoided, however awareness this is of focal importance.

Before the focus group assembled, following the framework of MSH51, a guideline for the

discussion was prepared. The areas of discussion and important points to be debated were

found and organized in relation to the objectives of the session. Patton (1987)52 was again

employed, as discussed in the qualitative interview section, when considering the more open

questions and informal interviewing that was to be exercised. Furthermore, to cover the

demographical issues and complement quantitative information needed, a number of

questions employed in the study were duplicated from the quantitative survey questionnaire,

and in addition some new questions were constructed following Czaja & Blairs53 framework

discussed earlier in the project. This was done to widen the knowledge base and enhance

comparability and comprehensibility of the result of this investigation. Please see Appendix D

for pre-session notes.

A few days before the workshop one of the participants (Age group: 21-35) called and

canceled due to work obligations, however a replacement in form of an old work colleague

was successfully engaged instead. On the day of the workshop a neighbor (Age group: 51-65)

called in sick, unfortunately it was not possible to find a replacement for this participant;

however it was not deemed to be sufficient grounds to cancel the meeting. The correct list of

the 7 participants for the workshop now follows:

Age group: 12-20 - 2 (1 neighbour and a 1 sister of friend)

Age group: 21-35 – 2 (1 study colleague & 1 old work colleague)

Age group: 35-50 – 2 (1 neighbour and 1 work colleague)

Age group: 51-65 – 1 (1 mother of a friend)

In general the workshop followed the structure as according to MSHs’ framework54. Firstly a

brief introduction was held where contact and communication was established and the mood

of the group was set. They were informed of the program of the day and the intentions of the

50 Grover & Vriens, The Handbook of Marketing Research, E-resource, 2009 51 MSH, Quality Guidelines for Focus Groups, E-resource, 2009 52 Education Online, Dr. Rita S. Y. Berry, E-resource, 2009 53 Czaja & Blair, Designing Surveys, 2005 54 MSH, Quality Guidelines for Focus Groups, E-resource, 2009


21

survey/workshop. While carefully managed and monitored by the moderator, the group then

discussed the topics planned and talked about the issues raised during the session.

Furthermore topics extending beyond this study were discussed, though this was done after

the Lady Case workshop; this can be read about in the appendix E and the post-project

perspective. Two stronger personalities in the group was identified (1 21-35, 1 36-50);

however this did not stop the others from joining in or disagreeing. Disagreements were

discussed more like two sides of a coin and it was accepted that tastes can differ, but there is

no actual right or wrong, keeping the atmosphere relaxed and very positive. It was more of a

challenge to stay focused on the subject at hand throughout the session than getting everyone

in the group talking, they were all very communicative.

At the end of the focus group the participants were asked to fill in a short survey that had been

prepared (this was also clarified in the introduction). Hereafter thanks was given and the

meeting was called to an end. The MSH framework suggests that the moderator gives a brief

summary of the discussed at the end of the session55. This was also the intention of the

moderator, however the meeting had gone almost half an hour over time and some had to

leave to be able to get home in time. Therefore this was not done, however they were offered

the opportunity to receive a summary per e-mail or mail in the days following the workshop

which was not taken up on. Subsequent to the meeting a summarized report regarding the

open discussion and a statistical analysis based on the survey material was prepared. Please

see appendix E for the work-shop discussion summary.

Reliability of the workshop

There were 2 non-respondents, 1 in the age-group 21 to 35 and 1 in the age-group of 51 to 65.

Applying the Freeman-Halton extension of the Fisher Exact test (FHF)56, allowing for 2x3

and 2x4 table calculations randomness of the sample group has been confirmed (FHF, P= 0,

67, two-tailed). To test the validation of the survey the questions 11 and 16 regarding interest

and grades of interest has been tested (FHF, P= 0, 14, two-tailed) and it has shown a 86%

probability that there are dependence between the variables which is not enough to

statistically validate the significance of the questions, however 6 out of 7 answered that the

product was interesting and 6 out of 7 thought the product was interesting or very interesting

showing a logical fit of the survey questions.

55 MSH, Quality Guidelines for Focus Groups, E-resource, 2009 56 Vassar Education, E-.resource, 2009


It should be noted that the participants,

Copenhagen, a metropolitan area, where the population is usually more prone to accept new

ideas and ways of life, they are so called early adapters

the result, not giving a full representation of the women in the country of Denmark. Another

issue is that, due to the limitations in time and resources for this

manager, to some extent, knew the participants of the

somewhat and give an artificial

mentioned before, care was taken to not have participants too personally close to the author

and in the role of moderator impartiality and openness was of

this workshop was done in Danish, increasing the risk of translational errors and yet again a

bi-lingual colleague was engaged during translations.

Theoretical Base

Focus & Summary of the Theoretical Base

This section covers the literary field of entrepreneurship in connectio

and it explains the theory of Sahlman

to supply the reader with the theoretical knowledge base to better u

process of the analysis.

Summarizing, there is no shortage of templates on how to write a business plan, however

many plans are too focused on the idea itself and does not focus enough on, or leaves out

completely, important elements like external influences, the human factor and the larger

context of potential competition. Sahlman’s framework has been chosen due to a more

57 Burns, Entrepreneurship & small business, 200158 Sahlman, Some thoughts on Business plans & How to write a g

“The Lady Case”

22

It should be noted that the participants, as with the quantitative survey, all comes from greater


ideas and ways of life, they are so called early adapters57. This can and probably does skew

giving a full representation of the women in the country of Denmark. Another

, due to the limitations in time and resources for this project

manager, to some extent, knew the participants of the survey. This can also affect the

artificial image of the situation regarding the product idea.


and in the role of moderator impartiality and openness was of focal importance. Furthermore


lingual colleague was engaged during translations.

Theoretical Base

the literary field of entrepreneurship in connection with business plans

the theory of Sahlman58 employed to support the analysis. This is done in order

to supply the reader with the theoretical knowledge base to better understand the structure and

here is no shortage of templates on how to write a business plan, however



text of potential competition. Sahlman’s framework has been chosen due to a more

Burns, Entrepreneurship & small business, 2001 ness plans & How to write a great Business Plan, 1996 & 1997

CBS 2009

as with the quantitative survey, all comes from greater


. This can and probably does skew

giving a full representation of the women in the country of Denmark. Another

project, the work-shop

survey. This can also affect the result

image of the situation regarding the product idea. However, as


focal importance. Furthermore,


n with business plans

This is done in order

nderstand the structure and

here is no shortage of templates on how to write a business plan, however



text of potential competition. Sahlman’s framework has been chosen due to a more

reat Business Plan, 1996 & 1997


23

realistic approach, a wider perspective and because it looks not only at “the what“ but also

“the why” and through the answer of these questions fatal flaws in the business concept can

often be revealed. Sahlman’s framework consists of 4 cornerstones, the opportunity, the

people, the context and the risk & reward, where the fit between them is vital for potential

success59. In addition the structures of Smith & Smith60, Brealey et al61 and Kotler62 were

applied to further the analysis.

Literary Review

The field of entrepreneurship is extensive, and there is no shortage of templates on how to

create a business plan for your business. A search of the CBS library using the key-word

“business plan” yielded over 300 relevant hits and a Google-search with the same key-word

produced over 67 Million hits. The key-word entrepreneurship gave an even higher number of

possible references. This gives a good indication as to how much information there is to be

found about this subject. Going through the material there is no doubt that even though there

are vast numbers of different approaches most traditional theory centre around the financial

aspects of the plan and how to best present this for the venture capitalists. Cohen63 follows

this line of thinking in his book on how to write a business plan. The two focus areas of the

framework are the financial section where he discusses how to get the loan and the

competition part where he looks at how the idea can make profit. This is all relevant but the

importance of the people and the organisation of the company is downplayed which presents

one of the weaknesses of this framework. Blackwell64 follows the traditional path as well, but

his “six step business plan” also deals with how to handle conflict between the plan and

strategy giving it a somewhat different angle to work from. Adams65 integrates the business

plan with a software application, creating “a business plan for dummies”. The examples are

easy to understand and it is very pedagogically correct, but it seems to be somewhat over-

simplified. It does not really discuss what is important, correct (or not correct) and what issues

needs to be answered and why. It just tells you to follow step 1 to 10 to create a business plan.

Barrow et al66, from Cranfield School of Management, has created a business plan with 6

59 Sahlman, Some thoughts on Business plans & How to write a great Business Plan, 1996 & 1997 60 Smith & Smith, Entrepreneurial finance, 2004 61 Brealey et al, Fundamentals of corporate financing, 2004 62 Kotler, Marketing Management, 2003 63 Cohen, The Business plan approved, 1992 64 Blackwell, How to prepare a business plan, 1993 65 Adams, Complete Business Plan with Software, 2002 66 Barrow et al, The Business plan workbook, 1998


24

phases which is intuitively logical and easy to follow. It looks deeper into the financial part

but the operations plan glosses over the importance of key-people such as employees,

managers, suppliers etc. Stutley67 focusing on the financials also looks into how to actually

present the business plan to get the necessary Venture Capital. Stutley also considers how

important knowledge is for success.

Moving away from the path of traditional business plans Seedcapital68, an internet-based

entrepreneurial resource, gives its views on how to get the best results. It still focuses on the

financial elements, but it also gives considerations as to what problems the products solve, i.e.

is it a solid idea. It also looks into the technologies involved and how to best utilise it giving it

another perspective when developing your idea. Another e-resource, Startvækst.dk69, also

follows the general steps in a business plan but its focus is more spread, looking at personal

resources and goals as well as profit and cash-flow.

The traditional focus of the business plan has in the past years been challenged by authors like

Sahlman70, Deakins71 and Shane72. Sahlman, writing for Harvard Business School, redirects

the focus to the idea behind the plan and the people running it. The framework looks at what

issues that need to be addressed, which questions need to be answered and why. However, it

does not provide with the solution as to how to answer the questions. Deakins, stresses that a

business plan should first be written for yourself, and afterward modified to fit the purpose of

need, e.g. a venture capitalist presentation. The 12 step plan makes intuitive sense, but it is

important to note that Deakins takes the British market as a point of reference, and might not

always be valid in other settings such as e.g. Denmark. Shane supports Deakins views and

kills some myths regarding entrepreneurship, start-ups and new business funding in the

process. The myth concerning VC funding and entrepreneurship is especially interesting

where Shane reminds us that it is a very low percentage of the start-ups that are funded using

Venture Capital. He also offers an overarching conceptual framework of the entrepreneurial

process focusing on strategic entrepreneurship and not directly on how to develop a business

idea. Harryson offers a different view on how to develop a business idea. His concept, Growth

Trough Innovation (GTI), focuses on the network effect and innovation within the company.

67 Stutley, The definite Business plan, 1999 68 Seedcapital, E-resource, 2009 69 Startvækst.dk, E-resource, 2009 70 Sahlman, Some thoughts on business-plans, article, 1996 71 Deakins, Entrepreneurship and small firms, 1999 72 Shane, The Illusions of Entrepreneurship, 2008


25

GTI assists an existing company to develop new ideas, and is not really geared to support the

development of entrepreneurs existing ideas looking to build a new organisation.

As a general conclusion it can be said that there is a multitude of different business plans,

many claiming to be “the ultimate solution”. But most plans forget that the understanding of

the need of the information, the “why”, is just as vital as the “what” in a business plan and just

because you have a great plan does not necessarily mean you are going to succeed.

Theoretical foundation - Sahlman

This paper employs Sahlman’s73 framework for composing a business plan as base to attempt

to unravel the real value of the “Lady-case” opportunity. Sahlman has been chosen due to a

more realistic approach, looking not only at “the what“ but also “the why” and through the

answer of these questions fatal flaws in the business concept can often be revealed. Sahlman

stresses that having a great idea or a great business plan does not equal instant success. Many

great ideas and plans have failed due to a misfit in or between the four categories in his

framework; The Opportunity, The People, The Context and Risk & Reward74 (In the 1996

version the Risk & Reward is called The Deal75). These categories are the foundation of

Sahlman’s business plan structure, which he sees as a possible “snap-shot of the future”76. In

these categories Sahlman poses a series of questions that need to be answered.77. Sahlman’s

framework does not only turn to venture capitalists or the like, it is also a good tool for the

entrepreneur to understand the business in depth.

� The Opportunity

This section needs to describe what is being sold, to whom and how and what the potentials

for it are. Sahlman does not put too much faith in detailed financial projections that span more

than one year. Firstly, almost all plans are to optimistically forecasted and secondly, it is

extremely difficult to project accurately far off in the future. But there are still some very

important issues that need to be laid out and explained in this section.

73 Sahlman, Some thoughts on Business plans & How to write a great Business Plan, 1996 & 1997 74 Sahlman, How to write a great business plan, 1997 75 Sahlman, Some thoughts on business plans, 1996 76 Sahlman Some thoughts on business plans, 1996 77 Sahlman, How to write a great business plan, 1997


26

To begin with the business idea is introduced, what are you actually selling and why would

people want to buy it. Then considerations should be made regarding the market

opportunities, the structure of the industry and the competition the new company may be

facing. From here the customers should be better defined and issues offered in the project

should be presented with a plan to alleviate the problems

Following Sahlman’s framework, the plan should now describe how the product should be

acquired and launched into the marketplace. Here sales-channel, price, growth potential,

break-even point, gross & net response, retention rate and cash-flow projections, among

others, are of interest for the readers of the plan. All in all it strives to establish the viability of

the idea.

� The People

A good plan is important, and the execution even more so. This makes the people involved in

the venture key to its success, and is hence one of the focal points in Sahlman’s outline.

Management, employees, lawyers, accountants, key-suppliers, etc should be considered and

described in this section. Sahlman continues to explain that the description should answer

who the entrepreneurs really are, and whom and what they know. Key issues like background,

school, work-experience, skills, knowledge and reputation should be clarified. The ones

reading the report will also consider if the team expectations are realistic, how they would

react to setbacks and if they need anyone else on the team. Furthermore the motivations of the

team are also put to scrutiny by any seasoned business plan analyst according to Sahlman. He

concludes that the fit of the four cornerstones of the framework is vital for the company and

management should spend considerable resources on increasing this fit. Sahlman’s views on

the importance of “the People” is supported by authors like Gimeno78, writing about human

capital in connection with survival, and Dahl & Reichstein79 who has found that industry-

specific experience positively effects the start-up survival rate in most cases.

78 Gimeno et al, Survival of the Fittest? Entrepreneurial Human Capital and the Persistence of Underperforming Firms, 1997 79 Dahl & Reichstein, Are you Experienced? Prior experience and the survival of New Organizations


27

� The Context

The context of the venture can also influence the fortunes of the undertaking immensely. In

this section Sahlman wants us to consider “the big picture”, what is going on in the country

and world around us, how the politics, regulatory environment, interest-rates, exchange-rates,

etc, affect the new company.

The vital information that needs to be illustrated here, according to Sahlman, is to show how

the context can help or hinder the venture, and demonstrate that you know change will come

and that you know how to deal with it. Examples like problems with harvesting, issues with

tolls or the possibility to lobby for your cause is mentioned as examples in this case. The

importance of the context is reinforced by Stuart & Sorensen, who in their article (Liquidity

Events and the Geographic Distribution of Entrepreneurial activity) find, among other, that

regional differences affect the funding rate for new bio-tech IPOs and acquisitions in

metropolitan areas80.

� Risk & Reward

As the title implies the potential risks and rewards for the venture are considered in this

element. In essence it looks at the defendability and possible results of the venture. Here it is

asked what in the future can go right and what could go wrong, and what can be done do

encourage or discourage these events from taking place? What revenue and rate of return

could be expected from this venture and how and when can the investors exit the company

without it causing instability or ruin? Another issue to consider is the competitor response;

what if they react much quicker than you anticipated, what would this mean for the company?

The events of the future are always uncertain but this provides an image of the more plausible

scenarios and should prepare the management to be able to react faster and adapt to the ever

changing environment.

80 Stuart & Sorensen, Liquidity Events and the Geographic Distribution of Entrepreneurial activity, 2003


In his first paper81, Sahlman reflects upon the different elements of the deal. He discusses the

importance of a fair, simple and trusting deal

and seller. He feels that it is important

employees, suppliers or logistical partners and not just focus on

out that silent funding partners are not always the best. Seasoned ve

usually not afraid to step in and get their hands dirty if the need arises and they have a lot of

knowledge that an entrepreneur really can use at different stages of the venture. But of course

this skill is paid for in loss of shares

you raise capital is often more important than the terms

Sahlman’s framework provides

offer all the tools to answer them. To accomplis

Brealey et al84 and Kotler85, among others,

Smith & Smith, form Claremont Graduate University,

Business School among other,

delves deeper into the makings of projections,

like86. Kotler, a professor from MIT, gives a very thorough ov

the marketing process, and provides tools f

presented87. This framework

segmentation, the marketing plan and other more conceptual issues within the

81 Sahlman, Some thoughts on business plans, 199682 Sahlman, How to write a great bus83 Smith & Smith, Entrepreneurial finance, 200484 Brealey et al, Fundamentals of corporate financing, 200485 Kotler, Marketing Management, 200386 Smith & Smith, Entrepreneurial finance, 2004 & 87 Kotler, Marketing Management, 2003

“The Lady Case”

28

, Sahlman reflects upon the different elements of the deal. He discusses the

and trusting deal with good incentives for both

that it is important to consider all the deals that need to be made, like with

employees, suppliers or logistical partners and not just focus on raising capital. He also point

out that silent funding partners are not always the best. Seasoned venture capitalists are



this skill is paid for in loss of shares and control. But Sahlman continues to stress: f

ore important than the terms82.

s framework provides the important questions that need to be answered but does not

ll the tools to answer them. To accomplish to do this the structures of

, among others, was applied.

, form Claremont Graduate University, and Brealey et al

Business School among other, takes a more financial approach towards the business plan and

delves deeper into the makings of projections, financial statements, cash-flow analysis and the

a professor from MIT, gives a very thorough overview of the different stages i

the marketing process, and provides tools for how to apply the models and frameworks

. This framework provides a clearer picture on how to execute the customer

segmentation, the marketing plan and other more conceptual issues within the

Sahlman, Some thoughts on business plans, 1996 business plan, 1997

Smith & Smith, Entrepreneurial finance, 2004 Brealey et al, Fundamentals of corporate financing, 2004

ler, Marketing Management, 2003 Smith & Smith, Entrepreneurial finance, 2004 & Brealey et al, Fundamentals of corporate Kotler, Marketing Management, 2003

CBS 2009

, Sahlman reflects upon the different elements of the deal. He discusses the

with good incentives for both between buyer

to be made, like with

raising capital. He also point

nture capitalists are



and control. But Sahlman continues to stress: from whom

the important questions that need to be answered but does not

of Smith & Smith83,

and Brealey et al, from London

the business plan and

flow analysis and the

erview of the different stages in

or how to apply the models and frameworks

a clearer picture on how to execute the customer

segmentation, the marketing plan and other more conceptual issues within the business plan.

ls of corporate financing, 2004


29

The Opportunity of the Lady Case concept

Focus & Short summary of the Opportunity analysis

This section, following the theory of Sahlman88, describes the general market and industry

situation. It specifies the target segment and looks into the 4Ps; Product, Place, Price and

Promotion in relation to the Lady Case. This is done to establish the viability of the Lady

Case concept.

Based on the findings as seen in table 4, page 56, the Lady Case concept has been found

viable with a huge global sales and growth potential and the industry structure is presently

quite attractive with no active direct competition and high profit potentials. The access to a

large customer base to leverage economies of scale is vital for the success of the product and

is identified as the highest barrier of entry in this industry. (Full summary p.56)

The General Market & Industry Structure

The general product idea

The Lady Case is a designed casing for sanitary napkins or tampons for women to carry in

their handbag. The accessory casing would firstly protect against the package deterioration

and secondly against the discomfort that may arise for a woman in “showing the world” the

content of her bag every time she opens it.

The general market

Sahlman teaches us the importance of knowing the market you are about to enter, its size, its

growth potential and its dangers89. The market for sanitary napkins and tampons, which sales

is needed to support the use of the Lady Case, is mostly dominated by conglomerates like

Procter & Gamble, who carries Always & Tampax, Johnson & Johnson representing Carefree,

Kimberly-Clark producing Kotex and SCA who market Libresse90. These multi-national

companies generate billions of dollars in turnover on sanitary products alone; the market for

these products is vast and generally world-wide.91 These global products forms a worldwide

88 Sahlman, How to write a great business plan, 1997 89 Sahlman, How to write a great business plan, 1997 90 Market Research World, E-resource, 2009 91 Procter & Gamble and Johnson & Johnson, E-resource, 2009


30

base of possible sales of the Lady Case, indicating that the overall market potential for this

product is huge and the prospective growth considerable.

The Lady Case priority markets would be the more developed countries where the sales of

sanitary napkins and tampons are relatively high, like the US or Europe92, and the income per

person allows for some spending on non-essential goods like accessories. However, the

ongoing modernization of many countries should open up further opportunities in the future,

extending the market potential for the Lady Case further. In Scandinavia Always, Libresse

and Tampax are the most recognized brands93. This concentration of brands and goods can

open up doors for a generic accessory product like the Lady Case. Furthermore, the sanitary

products differ somewhat in looks and functionality but the size of the packaging is very

similar across the lines, which again supports the usage of the Lady Case.

Competition & Entry barriers

Employing Porters framework of Five Forces94, it becomes evident that this universal feature

mentioned above can also attract unwanted attention from competitors seeking to enter the

market or defend their position within the sanitary care area. The current structure of the

market is not overly complex; there are few direct or indirect competitors. The possible direct

competitors found that could compete to some degree with the Lady Case was a patent on a

wallet-like invention for holding sanitary napkins in the US95 and a private person selling a

tampon-case on a fashion-site for used items96. No evidence was found that the American

invention has ever made it to production; furthermore, it does not appear to be very user-

friendly due to the construction of the “wallet” probably making it difficult to insert and

extract the sanitary napkins without damage. The tampon case sold by the private person

would infringe somewhat on the idea of the Lady Case but does not seem to be a possible

strong competitor since it was not a suitable size and shape for the purpose. Furthermore, it

was a limited deal on a site for used items and it has not been seen since. To conclude there

has been found no active direct competitor that would cause a serious threat to the Lady Case

launch at this moment.

92 Procter & Gamble, E-resource, 2009 93 SCA, E-resource, 2009 94 Porter M, Competitive Advantage, 1985 95 Freepatents, E-resource, 2008 96 Trendsales, E-resource, 2009


31

An indirect competitor that could take some shares in the sanitary napkin and tampon market

is the Diva-cup97 which would replace these products completely and render the Lady Case of

no use. The strength of this product is that it is reusable; however it is messier to use than the

more traditional protection and you need to clean it each time after use which would take

some getting used to. Due to these limitations in the product it is unlikely that it will become

fashionable within the foreseeable future securing the market potential for the Lady Case for

some time to come. It is also improbable that the company that sells the Diva-cup would react

adversely to the launch of a product like the Lady Case since it is not in direct competition

with its products. Though there has been found no immediate rivalry threats when analyzing

the competition for the Lady Case, it does not follow that it could not rapidly come into

existence. There are some huge multi-national corporations which operate within the same

industry. They have ready access to distribution and they already have a brand identity build

up lowering the entry barrier for these players considerably should they want to seek access.

Manufacturing products like the Lady Case is not a very costly industry to get into, especially

not when comparing with markets like bio-technology or other high-investment industries.

Economies of scale play an important role to reach a profitable level of sales, since the

product becomes cheaper to produce per item the larger quantities it is produced in. Too few

items produced would mean such a high sales price that it would be impossible to sell in the

market. To continue, the learning curve in producing a commodity like this should not be too

steep, due to the easy access to well-developed technology involved in making the casing.

This could leave the doors open for an easier entry of a competitor.

Maurer & Schotchmer98, Carlton & Perloff99, Vintergaard100 and many others advocate the

use of patents as a way to protect a company’s ideas and investments. The patent can be used

as a type of barrier to entry, to ensure that no one else can just copy the product and make

money from it without having developed it. Other possibilities to make money through

patents are to sell it, license the idea or to take royalties and allow for the concept to be used

by others101. However, since there is no new method or process-innovation in use when

constructing the Lady Case there is no patent protection that can be leveraged for this process.

Neither does a patent on the product itself seem possible since it is too generic. This is

97 Worldcare, E-resource, 2009 98 Maurer S & Schotchmer S, A primer for nonlawyers on intellectual property, 2004 99 Carlton & Perloff, Modern Industrial Organization, 2005 100 Vintergaard, lecture MIB, 2007 101 Carlton & Perloff, Modern Industrial Organization, 2005


32

confirmed by Kristina Klingenborg from the Danish “Patent & Varemærkestyrelsen” (Patent

& Brand protection) during a phone-interview102. Though, Klingenborg clarifies, a design

patent could be applied for if the design is unique enough. However a very similar product

with a different pattern would not be infringing on the idea and could not be sued. An

extensive search of the “Patent & Varemærkestyrelsen’s” data-bases yields no patent-results;

neither does a swift search done by Klingenborg from her station. 103

Sahlman stresses that “economically viable access to customers is the key to business”104

, this

case is no different. Of the participants in the survey less than 6% would consider buying it

online while almost 95% of the asked would rather buy it in a local supermarket or a more

accessory oriented shop like Matas. This indicates that the distribution muscle needed to

access the customers must have extensive reach and be well mobilized. Since the product is

quite simple to produce, difficult to protect and is somewhat dependant of economies of scale,

the distribution channels used and access to the customers are vital for its success. The latter

two would be some of the higher barriers to overcome for any entrant. The Lady Case is not a

product range with high exit barriers, since the initial investment in specific machinery, know-

how, etc is limited. In this case it would be the distribution that would be the costly element to

set up making unrelated entrance from companies not in the retail business less likely.

Supplier power

Observing the conditions for the production of the Lady Case, there are plenty of suppliers to

choose from. The production technology available for manufacturing a generic casing item

like the Lady Case is quite wide-spread. This, and the fact that the cost in terms of time,

capital and effort when switching, is low, weakens the power of the suppliers considerably. A

contract with the supplier would ensure that the entrepreneur is not side stepped by the

producer, and it would secure the order for the supplier. There is always the possibility that

the supplier would consider integrating forward, but it seems unlikely unless the supplier

would consider it a key-market and they felt they had the competencies to enter into the

competition.

102 Klingenborg, Telephone interview, Patent & Varemærkestyrelsen, 16.01.09 103 Klingenborg, Telephone interview, Patent & Varemærkestyrelsen, 16.01.09 104 Sahlman, Article, How to write a great business-plan, page 102, 1997


33

Buyer power & Threat of substitutes

Continuing to employ Porters five forces105, the power of the buyer is taken into account. In

this case the possible switching cost for the customer, were there alternative products, would

be relatively low. The product type does not lend itself to easy customer retention, since,

among other things, it is not a regular repeat-sale nor is it a high volume sale and furthermore

the product would not need maintenance. There is some room for product differentiation but it

is somewhat limited to the size and design of the casing, since the idea is to keep it discreet.

Multiple functions would work against that. According to the survey, less than 4% of the

women asked thought brand was important when buying a product like the Lady Case

strengthening the situation for this new and yet unknown brand. Since there are no real

substitutes or competitors at the market the bargaining leverage of the customers is lowered

considerably and a higher profit can be captured. However, the moment a competitor enters

the market with a similar product, with easy access to buy, the power balance is changed,

giving the customers a higher buyer power, since the switching cost is quite low since e.g. the

functions and place of purchase would be similar. The customer can also make an effort to

find a substitute for the Lady Case, but the search cost would be somewhat higher since a

casing in the right size and the same functionality is not that easily come by. The last power of

the supplier to exercise would be not to buy the product at all. As already established this is an

accessory and not a vital necessity product, giving more power to the consumer. However, if

the customer wishes to alleviate this problem, they have no other choice at the moment than to

seek other options since there is no product like the Lady Case on the market.

Considering the chains as the customer their buyer power would be significant since they

would have easier to find other suppliers and can press the prices due to bulk-buy. This is also

reflected upon in the pricing strategy section.

Customer segmentation & Findings of quantitative survey

Sahlman focuses on the importance of really knowing your customer106. Thus endeavoring to

customize the marketing effort and gain maximum effect from said approach, a customer

105 Porter M, Competitive Advantage, 1985 106 Sahlman, How to write a great business plan, 1997


34

segmentation process based on the outcomes of the quantitative survey, following the

framework of Kotler, has been applied107.

The general need-based customer segment that the Lady Case turns towards is women ranging

from early teens to their early fifties. Within this spectrum women are most likely to be in

need of tampons and sanitary napkins108, leading to a possible employment of the Lady Case

accessory. The demographical variables chosen to be measured in the survey of said segment

are age, marital status, family size, education, status, occupation and income. The area code

has been employed as geographical variable to indicate the present origin of the survey

participant. The final questions in the survey concern the products the Lady Case carries and

the consumers’ views on the Lady Case as a product idea. In appendix A, a full overview of

the questions asked with answer alternatives can be found.

Utilizing the results of the survey as base, further identifications and clarifications can be

made measuring variables set up against each other to define more narrow demographical and

geographical segmentations thus formulating a more precise image of the target group to be

exploited. There are many ways to segment the market using different variables like gender,

income, life-cycle, status, etc. In this analysis age has been used as demographical

segmentation divider and main variable to measure against after the first gender

generalization. This is done since the product used is firstly for women in their fertile stage of

life, and their life-cycle or income does not influence this fact. Furthermore the lifecycle

approach is difficult to define and the status variable is hard to narrow down sufficiently to be

of use in this segmentation. However, it is known that some general preferences do follow the

age curve to some extent and can be used as representative, especially so for more generic,

lower cost items such as the Lady Case109. It should be noted that this segmentation does

create a generalization, not everyone in the same age has the same tastes and needs but the

purpose of the segmentation is to take a broad view and attempt to find groups with the same

general tastes. And in this case age has been deemed to be the best divider of the choices

possible. Please see appendix F for excel-graphs over the survey answers calculated upon and

overall percentage results.

107 Kotler, Marketing Management, 2003 108 Netpatient, E-resource, 2009 109 Kotler, Marketing Management, 2003


35

Before moving into the more complex analysis of the customer group and the result of the

survey it is important to note that, as discussed in the methodology section, there is an

overrepresentation of the age groups 21-35 and 36-50, and conversely the age groups 12-20

(6% of survey participants) and 50-65 (4% of the survey participants) are underrepresented.

The underrepresented groups will still be taken into account and considered in the analysis but

caution will be applied.

The investigation of the different segments and their preferences opens with considering the

issue concerning possible irritations experienced when carrying sanitary napkins or tampons

in relation to the age groups. This should give indications to if there is a real need to cover

and if there is one or more age groups that are more prone to experience these irritations.

Looking at the survey result it is evident that the younger segments have familiarity with this

problem. Of the participants of the total survey 5, 5% (of less than 7%) was grouped between

12 and 20 and had checked the yes box for experiencing irritation while carrying said items.

The same goes for 38, 5% which are between 21 and 35, 24, 2% between 36 and 50 and 1%

between 51 and 65. Conversely there had been no problems for 1% aged 12 to 20, 15% aged

21 to 35, 12% aged 36 to 50 and 2% aged 51 to 65. Applying the chi-square no

interdependence is found between these two variables (DgF: 3, 95%: 7,815, real: 2, 59).

However, it still shows that there exist irritations and problems that are experienced by the

general segment in this issue.

In an effort to solve the problems arising from carrying the monthly protections the Lady Case

was introduced to the surveyed and it is clear that the product idea carried some appeal. This

can be said based on the findings of the survey, as illustrated in table 2, where more than 90%

of the women participating think the Lady Case is an interesting product, whereof almost 50%

are between 21 and 35. This relationship has been statistically confirmed110 (DgF: 3, 95%:

7,815, real: 8, 14).

110 Chi Square Statistics, E-resource, 2009


Table 2: Interest in the Lady Case p

The 6,5% represented by the group 12 to 20 all find the product interesting, however this

result needs to be considered in view of the number of representatives which in this case is 6.

Should a larger group be interviewed it is plausible that someone in t

not find the idea appealing. But it does show a very positive tendency and paints an

encouraging picture of possibilities for the future. Continuing on the positive interest

been confirmed that over 30% of the surveyed, being

product was interesting, however the 51 to 65s are evenly spread out between interest and no

interest with 2, 2% for each.

between 21 and 35 and 3, 3%

Delving deeper into the results of the survey the most positive responses within the groups

towards the Lady Case, as is illustrated in

and 36 to 50, following in that order. This

derived from the query regarding problems experienced with the protection in the hand

Though, as before, the low representation of the 12 to 20s promotes caution and deters

of the group as a target segment at this moment. However,

thoroughly represented and exhibits very positive views towards the product idea.

statistics of interest versus age

111 Chi Square Statistics, E-resource, 2009

“The Lady Case”

36

: Interest in the Lady Case product versus age in%



Should a larger group be interviewed it is plausible that someone in the same age group would


encouraging picture of possibilities for the future. Continuing on the positive interest

over 30% of the surveyed, being between 36 and 50 years old thought the


interest with 2, 2% for each. Of those that did not find the product idea interesting 4, 3% is

between 36 and 50.


as is illustrated in appendix F, lies in the age groups 1

and 36 to 50, following in that order. This outcome exhibits the same tendencies as the results

derived from the query regarding problems experienced with the protection in the hand

, as before, the low representation of the 12 to 20s promotes caution and deters

target segment at this moment. However, the two other

thoroughly represented and exhibits very positive views towards the product idea.

of interest versus age against the chi-square111 a dependence is found and confirme

resource, 2009

CBS 2009



he same age group would


encouraging picture of possibilities for the future. Continuing on the positive interest it has

between 36 and 50 years old thought the


Of those that did not find the product idea interesting 4, 3% is


lies in the age groups 12 to 20, 21 to 35

outcome exhibits the same tendencies as the results

derived from the query regarding problems experienced with the protection in the hand-bag.

, as before, the low representation of the 12 to 20s promotes caution and deters the use

two other age groups are

thoroughly represented and exhibits very positive views towards the product idea. Testing the

a dependence is found and confirmed,


37

(DgF: 3, 95%: 7,815, real: 8, 14) which means the findings are statistically viable. It should

also be noted that the strong interest exhibited in the quantitative survey has also been

confirmed in the more qualitative workshop performed were 6 out of 7 participants thought it

was a Interesting or Very Interesting idea. The interest seems to come from especially the

younger age-groups. However, this has not been statistically confirmed (FHF, P= 0, 14, two-

tailed).

Though over 90% finds the Lady Case product interesting this does not necessarily mean that

that large a percentage of the women would by the product when in the market. Examining

the different levels of need can perhaps give a more realistic picture of potential buyers in the

market. Comparing the different sections, the younger segments exhibit a higher level of need

for a product like the Lady Case. Of the surveyed over 5% in the group of 12 to 20s, 36% of

the 21 to 35 and 26% of the 36 to 50 indicates what could be called a high need for the

product idea. Less than 7% (12-20-0%, 21-35- 3%, 36-50- 2%, 51-65- 3%) of the asked could

perceive no need for a product like the Lady Case. In the middle, still experiencing a need for

solving the problem but indifferent to the Lady Case feeling there are other ways to resolve

this issue, 1% is between 12 and 20, 14% is between 21 and 35, 7% is between 36 and 50 and

1% is between 51 and 65. This statistic must be analysed and applied with care both because

no dependence was found (DgF: 6, 95%: 12,592, real: 4, 97), and also due to the uncertainty

surrounding how this question truly was understood by the women partaking in the survey.

The question was clarified to most of the answering party that the second alternative (being

indifferent) should be chosen if they would want to solve the problem using unrelated

products and the first alternative should be chosen if the product idea, or something very

similar, was something they thought would solve their problems and they would find

plausible to purchase. At first glance it may not seem realistic to expect that almost 70%

would prefer a product just like or very similar to the Lady Case to other feasible though

unrelated, easy to come by, alternatives. However, real alternative like designed casings built

for other purposes in the right size and form with adequate functionality is not easily found on

the market. Viewed in this light the result is much more plausible to consider. This is

furthermore supported by the results of the workshop where 6 out of 7 think they would buy

the product if it is easy accessible and within an acceptable price-range. The statistical

analysis reveal that there is an 86% possibility that there is not just a random outcome (FHF,

P=0, 14, two tailed).


38

Overall it can be said that the “Need” question indicates that there exists a significant interest

for a solution to the issues encountered when carrying monthly protection in the hand-bag.

More importantly it demonstrates a positive position towards attaining the product and a

belief that it is a feasible way to solve said problem. Looking at the possible sales potential for

the Lady Case it implies that between 60 and 70 % of the surveyed, especially within the

younger age groups, would consider actually acquiring the product. However, due to the

possible ambiguity of the survey question this is seen more as a general trend or guideline

than hard fact that can be directly applied. Please see the methodology section for further

discussions on this issue.

Please see Appendix G for a detailed analysis of age/income, age/education, age/family

members and age/price in this segmentation.

To summarize the group aged between 21 and 35 is showing very positive interest and need

responses towards the Lady Case and exhibits a stable and large scale buying potential with a

rather consistent price range acceptance between 51 and 75 dkk. This totality with clustered

preferences makes them the group most likely to buy at a higher price and designates the 21 to

35 to be the target segment for the Lady Case product. However, this product does not lend

itself completely towards an absolute single-segment concentration; it is more of a product

specialization turning to all women in fertile age with the same problems. But there are

always more profitable segments where the focus of the marketing effort can be set, though

not to exclude but to include and create awareness. Based on this the women aged 12 to 20

also exhibits great interest and buying potential though the price sensitivity seems higher.

This group is still highly interesting and is seen as a second target segment, though the size of

the original test sample is kept in mind.

It is also important to note that there is a geographical constraint to this segmentation, both

due to the metropolic location of the tests but also to reach as many consumers as possible

where adaption to new products is faster. It is assumed that people in larger towns have

similar behavior and attitudes towards new products and its uses; therefore the geographical

constraint is specified as the segmented group needs to be located in a town where the

population is greater than > 20.000. Customer loyalty is applied and ranked highly in many

customer segmentations. However, with a generic, lower-value, non-essential product like the

Lady Case which is not a multiple repeat sale product customer loyalty would be very


39

difficult to build and even harder to retain. Should the Lady Case be able to be supported by a

known fashion brand it could give an edge to the sales situation but it does not seem feasible

that the Lady Case on its own will create such a loyalty in the short or medium run.

Market strategy – the 4 Ps

Following Sahlman112 (and Kotler113) a marketing mix with logistical planning, value

proposition and price positioning for the product needs to be produced. Neil Borden and E.

Jerome McCarthy (Building on Borden’s work) writing from Harvard Business School in the

1960´s created the concept of a marketing mix and its four P´s; product, place, price and

promotion. This model is very useful when marketing consumer products that are not high

value items. 114

The Product

The product idea in relation to the end user

The problem the Lady Case addresses is that the packaging for sanitary napkins especially,

but also some tampon packaging, is not durable when stored in e.g. a handbag. The colour of

the sanitary napkin packaging is also usually very, very bright which means it is always the

first thing you see when you open your bag. The casing would firstly protect against the

package deterioration and secondly against the discomfort that may arise every time a woman

has to open her bag having the colourful content on display. 91% of the women asked in the

quantitative survey carry extra protection on their person “just in case” and almost 70% of

these women have experienced problems and/or irritations with the sanitary napkins or

tampons while being carried. The survey also revealed and statistically confirmed that over

90% thought that the Lady Case was an interesting product idea and many expressed a need

for this or a similar product as shown. This survey can be said to have revealed an uncovered

need and gives a very encouraging image of the possible potential of the Lady Case.

Product specifications & support

Based on the information received from the workshop, size and colour was set. To begin with,

the Lady Case would come in one size (L: 12, 2 cm, W: 8, 3 cm, D: 1, 2 cm) fitting two

ordinary napkins (from Always or Libresse standard which most follows) or 5 small tampons

112 Sahlman, Some thoughts on Business plans & How to write a great Business Plan, 1996 & 1997 113 Kotler, Marketing Management, 2003 114 Burns, Entrepreneurship & small business, 2001


40

and it would be made available in one design; a silver light metal version with inscriptions,

with the possibility of more options (black) in size and colour to come. Please see appendix

H for a prototype-picture of the product. The Lady Case name is available as a trademark and

there is no valid patent agreements found that this product would infringe upon neither in

Denmark115 nor in the EU116.

The guarantee given on the product would follow the Danish legislation which according to

the law of commerce (“købe-loven”) ensures the consumer a two year period after purchase

in which to raise a claim if the product is not meeting manufacturing standards117. The claim

would be handled by the end seller and would be compensated accordingly. There is an

assumed estimate that 1% of the delivered products will have flaws. The simplicity and price-

range of the product does not induce a greater need of warranties or extended guarantees.

Initially there would be no grounds for a customer-support hot-line; questions should be able

to be handled in-store. However, a support hot-line via e-mail could be managed quite easily

by the entrepreneur should any questions regarding the product arise post purchase.

The Place

Following Borden and McCarthy´s outline as according to Burns “the place” refers to locating

which channels are used to reach the customers and how the product is distributed

accordingly118.

Channel

There are many ways to trade a product like the Lady Case, and looking deeper into the

answers of the survey it reveals some essential facts regarding the importance of choice in

terms of place and mode of sales. Through the survey it was communicated that the most

preferred place of purchase for almost 60% of the consumers would be more accessory

oriented. The secondly most preferred place is the local supermarket and only 5% thought the

internet would be the most convenient mode of purchase. The survey also confirms that it is

especially the younger segments who is partial to the accessory-shop alternative, over 73% of

the participants aged between 21 and 35 thinks so and they are closely followed by the 12 to

115 Varemærkestyrelsen, E-resource, 2009 116 Trademark Consultation Services, E-resource, 20099 117 Forbrugerstyrelsen, E-resource, 2009 118 Burns, Entrepreneurship & small business, 2001


41

20s with 66% (DgF: 6, 95%: 12,592 real: 17,1 ). Furthermore over 30% of the surveyed

thinks that shopping convenience is one of the most important factors for purchase when it is

a product like the Lady Case.

The findings from the workshop also underline the importance of place of purchase and

shopping convenience. All participants in the target segments indicated that a more accessory

oriented shop would be a preferred place of purchase. In addition, they demonstrated a

willingness to pay more for a product bought in said accessory oriented shop. They also

stressed the importance of access to the product that it would need to be “in their way” as one

participant from the workshop put it. This indicates that the convenience of the point of sales

is a very important factor for expanding the Lady Case growth potential.

Considering the competitive situation for the Lady Case in entering the market, there are

multiple scenarios yielding different earning potential at different risk levels. Concerning the

web approach, a homepage will be developed for the Lady Case with information about the

product and the option to purchase online. However it is not a high value item and it is not a

product that the consumer would spend hours looking for and comparing with other products

in the category, as some would do when buying a flat-screen or the like. As the survey has

confirmed it is a product that needs to have a very low search cost with easy access for the

customer, and the internet can therefore, in this case, be ruled out as main point of sales.

During the workshop a suggestion was put forth to sell the Lady Case through home-based

sales such as “Oriflame”, where the products is sold by private persons through their network

who then in turn pay the company. It was generally accepted as an interesting idea; however,

none of the participants could name anyone selling it or something similar to it. A quick

search of the internet gave the answer as to why. Oriflame began with home-sales and home-

parties but the Danish market has not accepted this type of sales so they, along with many

others, have had to find new ways to survive119. That this mode of sales is ruled out, (as well

as the online-only sales approach) is further enforced by the fact that the Lady Case is a

product that is dependent on obtaining access to an extensive customer base where mass-sales

is possible and economies of scales can be employed. This combination point towards the

exploitation of either the accessory oriented shops or supermarkets. Taking point in the target

119 Orriflame, E-resource, 2009


42

segments the more accessory oriented shops are identified as being the optimal point of sales

for this product.

There are several ways to approach this issue; the first option would be to “go it alone” and

attempt to sell the product through the company directly or through independent retailers. To

build up your own sales machine, not based on the internet, with a product like the Lady Case

does not seem feasible, not only due to the large distribution muscle needed but also since the

possibility of a high volume sale is imperative and to gain enough market shares the

entrepreneur would need to acquire many, many contract of sale with the independent stores.

The above implies that the start-up, on its own, does not hold a satisfactory access to its

potential consumers. To succeed with this would require an enormous amount of work

meaning it would be difficult to hold another job at the same time, and if the sale is too low

there is no salary. The risk would be very high and the chance of success equally low.

The second approach would be to attempt to sell the Lady Case through one or many chains

of stores. To succeed, this scenario would need to secure a deal with at least one of the larger

retail chains to ensure the use of their distribution channels and access to their customer base

to attempt to leverage sales of large enough quantities to produce a profit. This mode would

require a large quantity of stock binding capital, furthermore if the sales are made directly to

the retailer the price and possible earnings would be substantially lower since the chains in

general have a higher buyer power. The challenge would of course lie in to be able to actually

secure a contract like that, which would be difficult but not impossible with the right

connections. In this paper “Matas” will be used as example for the accessory chain of stores

since it fits the description and size of what is needed to access the customers. Cooperating

with the chain it could be possible to run some tests using a few stores from where to sell the

Lady Case. This would reduce risk of misinterpreting demand however it could also open the

way for competitors. Other issues with these scenarios are the risk of vertical integration or

direct competition from one of the retail chains or conglomerates which could be difficult to

contend with for the start-up. Looking at the distribution possibilities if a deal was to be struck

between the entrepreneur and a chain of stores, it is standard that they have a central

warehouse where all goods come in to be distributed. “Matas” has about 295 stores in


43

Denmark and a central warehouse in Allerød120. This scenario would incur freight costs for

the entrepreneur of less than 0, 1 per item according to Danske Fragtmænd121.

Sahlman puts forth a suggestion to investigate ways to cooperate and form alliances with

future potential competitors122, this is done to alleviate the risk-taking and attempt to lessen

the probability of a stronger player entering the market at a later stage to take over. In this

case it could mean working close together with one of the big conglomerates, like Always

(Procter & Gamble) or Libresse (SCA) developing the lady Case leveraging their brand to

increase awareness and potential sales. An alliance of this sort would ensure some protection

against rivals and the use of the much sought after distribution channels and connections

lessening the risk of failure considerably. The challenge here would be to create this

cooperation without being completely overrun or overtaken by the much bigger partner. As a

whole the start-up must show an ability to create value as a company and partner for it to be

interesting. Also the entrepreneur must show that the start-up can do something that the

conglomerate cannot do easily themselves. Unfortunately, without a patent to protect the idea

or any special know-how vital for success the risk of the larger partner just taking over is

exceedingly high which makes this an even higher risk alternative.

A fourth scenario would be to sell the entire concept to one of the most likely competitors,

one of the conglomerates in this case, and attempt to cash in on the idea without taking the

risk involved in starting a new business. If it is a concept for cash deal, this would mean a loss

of all possible future profit and giving up the rights to build the concept to something bigger

on your own. The risk in relation to investment is reduced significantly, but so is the potential

profit since it is a one-time deal. The problem would be, as with much else, to get the deal in

the first place, and not just being copied by your potential customer. As said before; having

not just an idea but a concept with a patent to sell could have yielded some safeguards

towards copy-cats, however this is not the case and the risk of idea theft is overwhelming in

this scenario. After all, why should the company pay for something it can get for free?

120 Matas, E-resource, 2009 121 Danske Fragtmænd, Dahl, e-mail, 2009 122 Sahlman, How to write a great Business Plan, 1997


44

The Price

According to Sahlman123 it is imperative to know your true costs and to find a good pricing

strategy fitting the product-idea. To identify the correct price strategy the 6 step model of

Kotler124 is employed. Looking at the pricing objectives two opposite sets are identified as

being acceptable, it involves either to maximize profit now with prices set as high as possible

or to maximize market-shares and sell at a lower price which would be a more long-term plan.

The risks of potential entrants are quite high and the competition would probably have a lot of

money to put behind its rivaling product, so even though the Lady Case would gain a large

market share it would still be threatened. Hence a more current maximization of profit is

opted for and a higher price point where a large part of the target segment consumers would

still buy it is recommended. The positioning would be called a medium value strategy

(bordering on overcharging) where both product quality and price follows each other.

Determining demand in relation to pricing for a new product idea is difficult, in this study

both the quantitative and qualitative survey will be used as base to attempt to determine this.

Analyzing the results from the quantitative survey, as is illustrated in table 3, it is clear how

the more acceptable price-ranges are configured. Furthermore it does give indications as to

the price sensitivity of the consumers regarding a product like the Lady Case.

Table 3: Potential price range for purchase of the Lady Case indicated by all ages in %

123 Sahlman, How to write a great business plan, 1997 124 Kotler, Marketing Management, 2003

0

10

20

30

40

50

60

70

80

90

100

0 25-50 50-75 76-100 101-125

Price

126-150

DKK

%

All Ages in % against Price

Q Sold


45

Looking at the market there are no direct substitutes for the Lady Case at the moment and the

expenditure is not a big part of the general income of the consumers. This has a positive effect

making the consumers less price sensitive. However, it is non-essential goods which makes it

easier for the consumer to pass on the offer should the price appear to high. Going back to

table 3 giving an overview of the price the consumers would be willing to pay for the Lady

Case, less than 25% would not pay more than 50 DKK, while over 50% would pay between

50 and 75 DKK. Hereafter the demand decreases quite rapidly where almost 20 % would pay

between 75 and 100 DKK and less than 4% would consider paying more than this.

Focusing on the target segment of the age group 21 to 35 they are more willing to pay for this

kind of product: 20% would pay up to 50 DKK, over 55% thinks they would pay up to 75

DKK and again almost 20% would pay between 76 and 100 DKK. 6% would go even higher

than this though it is important to note that this relationship has not been statistically

confirmed. However, the smaller, more qualitative study made supports these findings where

the age group 21 to 35 lies between 50 and 75 DKK, the younger segment is more price-

sensitive and the older segments is spread between. These results imply that there is some

sensitivity towards the price, but it is not concerning a crown or two but in the tens or twenty

crowns difference.

It is also important to note that over 60% of the women asked thought that design was one of

the most important factors when purchasing the Lady Case, and over 30% thought the same

about value. Furthermore, design has been a focus both in the quantitative and qualitative

studies. As the workshop participants all agreed; the price paid depends on the design and

“feeling” of the casing. If it feels good, the design is appealing and the functionality is

satisfactory a higher price is much more acceptable. To find the “right” design for the Lady

Case is through this identified as a critical success factor if this venture is to succeed.

Costs and potential sales

The next step in the pricing decision is to estimate total costs and capital needs to calculate the

correct charge. Through the analysis it has been made clear that the entrepreneur would find it

extremely difficult and very risky to sell this product through individual deals and

independent stores since a high enough volume would be very difficult to achieve.

Furthermore, alliance with a larger partner and sale of idea has been ruled out as feasible

options. This leaves the alternative for the entrepreneur to negotiate a deal with one of the


46

bigger accessory-chains, which returns us to Matas as example. Looking at the population of

women in Denmark, there are over 2 million between 12 and 65, of who more than 400.000

are between 21 and 35 years old125. But of course not all of these women shop in Matas and

not everyone shopping in Matas would by a casing. However, looking at how many customers

Matas have gives an idea of the possible range and chance of a sale of the Lady Case. Matas

expedites 26 million customers a year, of which most are women; this means that more than 2

million people go through the Matas stores per month126. Of course, some of these customers

are men, others are repeat customers and since the Lady Case is a product you by once every

few years the repeat customers are not likely to by more than one casing over a longer period

of time. It does not seem unreasonable to assume that out of more than 26 million expeditions

per year about 4 million of these should fit the user group of the Lady Case and could go

through the Matas stores in Denmark. If every hundredth expedition of these would include a

casing this would indicate a potential sale of 40.000 casings throughout the first year. This

implies that each store needs to sell almost 136 casings on a yearly basis. This should not be

an impossible assumption though this is of course depending on a correct pricing and

exposure as well. Expecting a yearly sale of 40.000 units, calculations are made with a partial

delivery and payment of 20.000 units twice. Should the idea be unsuccessful, the second order

will not be placed and some risk and costs can be avoided. Should the sales increase beyond

expectations more could be ordered and delivered within 6 weeks. The unit prices are based

on a quotation from the company Titoma who specializes in design for Asian

manufacturing127.

The entrepreneur will not produce the casing since it would require far too much investment

capital and risk attached to do this. The initial cost is 20.000 DKK, which is a one-time cost

for tools and moulds for the production which can be re-used at a later stage. At 20.000 units

ordered the unit price including freight but excluding toll to Denmark is, according to Titoma,

0, 96 Euros per casing in light metal (aluminum) with some inscription work128. Since these

prices can change somewhat due to changes in prices in the basic materials and the like, and a

reasonable quality is imperative the cost is estimated to be 1 Euro per unit as affixed price,

125 Danmarks statistic, E-resource, 2009 126 Matas, E-mail, Quote from Lis Sørensen – Customer support, 2009 127 Titoma, E-mail, Quote from Olsson M, 2009 128 Titoma, E-mail, Quote from Olsson M, 2009


47

which here is translated into a variable cost of 7, 1 Danish kroner. Taking the Danish told of

6% into account and a 1% damaged goods this adds on 0, 6 DKK to a total of 7, 7 DKK129.

These calculations are based on selling business to business chain. Since the chains as

discussed in the logistical analysis usually have a central warehouse the cost of distribution

within Denmark is kept to a minimum. Using the Matas scenario employing Danske

Fragtmænd130 as base and adding a small buffer in case there are longer freights or reloading

involved, the distribution cost per unit is set at 0, 15 Euros, which in this calculation is

translated into a variable delivery cost of 1 DKK per, indicating a unit total

production/delivery cost of 8, 7 DKK per unit.

Depending on how much the chains decide to take on the cost of stock can vary. Though all

effort will be made to keep the stock to a minimum, there will be need to carry some in order

to cater for the chains as the orders comes in. This is of course dependent on the actual sale of

the product. Also, since it takes over one month from date of order to receive a shipment it

cannot be ordered in real time, too large time lags will occur. To begin with this would not

require an entire warehouse full time, but a rental space near the central warehouse where the

goods can be held for a short time before deployment. The extra storage is estimated to cost

about 2.000 DKK per month with a local supplier like Shurgard131. This indicates a yearly

more or less fixed cost of 24.000 DKK. If the Lady Case becomes a hit, a larger facility can

be rented later on.

The marketing budget is set to 100.000 to be used at the launch focusing on Denmark. Should

the Lady Case be as successful as hoped more money will be employed for marketing and

product development at a later stage. However, these costs will be covered by the profit from

the sales through reinvestments and thus carried by the next batch. Cost of external help for

contracts and the like has been assessed to be 20.000 DKK, and 10.000 DKK for the use of an

accountant. 5.000 DKK is estimated to be used to improve the design of the casing to ensure

fit between design and customer expectations. Furthermore 15.000 DKK is put aside for

expenses, like the telephone bill, of the entrepreneur and 20.000 DKK are calculated to be

129 Told og Skat, E-resource, 2009 130 Danske Fragtmænd, Dahl, e-mail, 2009 131 Shurgard, E-mail – Price inquiry, 2009


48

used for covering unforeseen expenses for this launch. 50.000 DKK is judged to be needed to

invest in IT systems to be able to handle the order processing and the like.

If 20.000 units are in the delivery system at the same time, it implies that 194.000 DKK has

been paid to the supplier, and is bound for the time being. At the same time the marketing

effort valued to 100.000 dkk is underway and other investments as stated above must be

made. Building on Smith & Smith’s132 approach towards opportunity cost of capital it is

calculated on a simple level with a higher interest than the Danish bonds market133 due to the

risks involved, in this case it is assumed to be 10% per annum on the 385.000 dkk employed.

This leads to a fixed opportunity cost of about 38.500 DKK per annum. Furthermore it is

deemed realistic that a loan in some sort or form needs to be taken to cover the expenses

incurred during this time. The entrepreneur holds about 175.000 DKK for investment,

however about another 210.000 is needed to secure this venture. Since it is not a big enough

investment to acquire funds via Venture Capital it stands between a bank and a business angel

(BA). A BA can perhaps help with knowledge but also wants s large part of the venture in

return. Since “the people” is not analyzed in this section a short term loan of 210.000 DKK,

with collateral at an annual effective interest of 10% over 5 years where the first year is

without amortization, is assumed. This leads to an average interest expense of 14.700 DKK

per annum over 5 years, since interest is still being paid the first year. Spreading the fixed

costs over the total yearly expected sales in addition to adding the variable costs per unit

yields a final average cost of 17, 9 DKK per unit.

The following step in the pricing decisions is to attempt to analyze the competitors’ costs,

prices and offers134. However, since this is a new product idea there are no direct competitors

to measure against. Looking at the larger indirect competition one can argue that these

companies have a higher bargaining power and can lower the cost of production and shipment

due to economies of scale. They have a well-developed network of the supply chain and they

should also have a more global reach in the markets. However, it should also follow that they

have higher fixed costs, higher marketing costs to protect its brands and less agility in the

organization.

132 Smith & Smith, Entrepreneurial finance, 2004 133 Jyskebank, E-resource, 2009 134 Kotler, Marketing Management, 2003


49

Continuing to employ the Kotler pricing model135 the final steps look at selecting a pricing

method and determining the final price. The pricing method applied is the 3C framework

which considers the customers demand, the cost function and the competitors’ position in the

situation136. The perceived value of the Lady Case varies across the surveyed women,

however at the price level 50 to 75 DKK over 70% of the potential customers are captured.

The workshop done confirmed this trend where 4 out of 6 would pay the same amount. Both

the survey and the workshop also corroborated that the age-group between 21 and 35 have a

very high representation in the 50 to 75 DKK pricing range, though it is important to note that

the statistical dependence was not completely corroborated.

This higher level of pricing would give a high profit per sale but it could also tempt the

competition to join in the market. Should the price be set at 25 to 50 DKK over 95% of the

potential buyers are captured and the lower price and profit margin could work more as a

deterrent for any competitor thinking about taking up the trade. However, if the price is set

too low the profit potential plummets and it would be difficult to introduce other price-level

versions later on in the process. It is also important to remember that the workshop revealed

that the younger age groups would pay more for a product like the Lady Case if it was bought

in a more accessory oriented shop like “Accessories” or “Matas” than they would in the local

supermarket. Almost 40% of the women asked in the survey think value for money is

important when buying the product, however over 65% considers the design one of the most

important factor for purchase. It has also been mentioned multiple times during both the

survey and the workshop that the price is not that important. If the design and “the feeling” of

the casing is right it is ok to charge a higher price. The cost to cover pr unit sold is 17, 9 DKK,

and it is important to remember that the stores would add between 20 to 30% in mark-up to

ensure their own profit margin137. High volume stores usually have a mark-up in the lower

end and less high-volume, like the accessory stores, usually operate with a higher mark-up

percentage. A chain like Matas probably adds on 30% of the purchasing price as mark-up of

an item in the same cost group as the Lady Case138, but to be certain to capture all the costs

35% will be used in this calculation. Furthermore VAT of 25 % is added to the sales price.

Please see appendix I for a discussion regarding potential at price level 50 and 75 DKK.

135 Kotler, Marketing Management, 2003 136 Kotler, Marketing Management, 2003 137 Kotler, Marketing Management, 2003 138 Loreal, Egerrup N-Trainee, Phonecall, 2009


50

To capitalize on the first mover advantages, maximize the potential return when dealing with

a chain of stores and give room for another quality of the Lady Case in the future a higher

price level is suggested, however to attempt to protect the market and capture as many

potential buyers as possible and target the younger segments, a more psychological sales price

of 59 or 69 DKK per unit is investigated. The recommended sales price of 59 DKK yields a

sales price to the end-sellers of 35 DKK, giving 12, 2 DKK per unit in mark-up and 11, 8

DKK in VAT. After deducting the costs the contribution is 17, 1 DKK. At 69 DKK per unit it

implies that the end-seller price is 41 DKK whereof 13, 8 DKK is VAT, 14, 3 DKK is end-

seller mark-up and the residue is 23 DKK after costs.

Again considering a sales price of 35 DKK would yield about 680.000 DKK and 41 DKK

would yield about 920.000 DKK in profit and reinvestment before tax. At sales of 20.000

units at 35 DKK over 340.000 should be free to buy new material and invest further in

expansion. And at the same sales level and a price of 41 DKK 460.000 DKK should be

available for procurement and growth initiatives and the like meaning that both scenarios give

access to not only buying new stock but also expanding the marketing effort and market reach

of the Lady Case.

When negotiating with the retailer in this scenario the entrepreneur should attempt to gain a

deal securing the sales price of 41 (end price 69 DKK) implying a possible return and

reinvestment of about 920.000 before tax. That would probably be a dream scenario since the

chains buyer power is very high and the general competition in the market is very tough. It is

perhaps more realistic to assume that a 35 DKK (end price 59 DKK) is accepted, at this level

an approximate reinvestment opportunity of about 680.000 DKK before tax at 40.000 units

sold is identified. To go down to the 29, 5 mark, a 50 DKK end sales price, would mean a

significantly lower profit margin and the plowback rate would probably have to be increased

over the following years as well as to expand market shares and potential sales. This would

also give a potential reinvestment problem after 20.000 units sold where it would be difficult

to other than just buy new stock. To go below this would not be recommended since the

future profit potential is low and it would cannibalize the market for future expansion. It is

furthermore important to remember that other issues but price can be negotiated into a deal.

An example would be giving over the responsibility of the shipment from the harbor to the

central warehouse. Other issues could be payment terms or commercial placement or similar.


51

This is not discussed further in this project due to time and space constraints and also due to

difficulties in predicting outcome of negotiations.

For this project it is assumed that the entrepreneur alone can negotiate a price of 35 DKK,

which is a final sales price of 59 DKK.

The Promotion

In the promotional view firstmover disadvantages become an issue. Since it is a new product

the knowledge of it is nonexistent. The first step following the advice of Kotler is to position

the brand in relation to the intended consumers, to create awareness and awaken a need for the

product139. The Lady Case turns towards women, the target age group is between 21 and 35,

lives alone or with a partner in a more populated area, has a bachelor degree or higher, is

either still studying or working full time, and has a general income which lies between the

lower and middle sections, whereof the majority is located in the 100k-200k and 300k-400k

grids. The Lady Case is positioned as a good design and quality casing for a moderate

premium price (about 15-20%) which helps keep the sanitary napkin or tampon whole and

keeps it discreet. The protective aspect of the casing is the number one benefit of the Lady

Case however the discretion feature is also seen as a central benefit and will be promoted as

one.

The positioning statement to support the Lady Case is:

“To the modern urban woman on the go who need to be prepared for all situations, the Lady

Case is a casing for sanitary napkins and tampons that keeps it safe and discreet in your

purse until needed.”

Considering the important factors for purchase of the Lady Case it is clear that design is of

outmost importance, closely followed by value for money, shopping convenience and high

quality. During the workshop it was also revealed that the Lady Case would not be a strong

compelling purchase. They would most likely buy it if it was something they came across in

the everyday life. It is not something they would use a great amount of time to find on the

internet or in a special store. This implies that the final decision about buying is made in the

store, when the Lady Case is within easy access to the consumer. Looking at the important

139 Kotler, Marketing Management, 2003


52

factors for purchase and adding this to the already discussed issues regarding the impact of the

sales channels it is not unrealistic to call this a key driver for success. If it is not within easy

access to the customer few will come looking for it, hence very low sales and no profit which

is equivalent to failure in the long run. The renewal rate of this product would not be very

high, since the design is meant to be more classic and discreet meaning it (the style) should

hold for many years. As the survey exposed the quality and durability needs to be quite high,

meaning it is not something that would break easily, of course depending on how it was

handled by the owner. But realistically it could be a renewal rate of about 5 to 7 years though

it is a quite speculative statement.

The marketing approach employed, when the channel used is a chain of accessory related

stores, needs to be developed in cooperation with the end seller. This is to ensure

synchronization so the stores are ready should a commercial be sent out and to ensure both

actual fit of in-store advertisement and display alternatives. Please see appendix J for a more

detailed plan of the marketing expenditure.

Financial projections

In his paper Sahlman states “As every seasoned investor knows, financial projections for a

new company- especially detailed, month-by-month projections that stretch out for more than

a year- are an act of imagination”140

This warns about the dangers of attempting to forecast

the future fortunes of a new product in too much detail and too far ahead, however a more

general forecast should help to indicate how the situation can play out, where the breaking

point lies and how the investment is spread. It is a foundation for risk calculation, though it is

vital that more realistic common sense and carefulness and less subjectivity and optimism are

applied when developing these calculations.

Sahlman stresses the importance of knowing when the entrepreneur must buy the resources,

when they need to be paid and what the actual cost of production and delivery is. It is also

vital to recognize the break-even point of the venture, its sustainability potential and its cash

collection procedure, i.e. how and how long before the customer pays141.

140 Sahlman, How to write a great business plan, 1997, P. 98 141 Sahlman, How to write a great business plan, 1997


53

Looking at the acquisition of resources for the first year an overview can be found in

appendix K. It is clear that most resource and investment needs lie early in the start-up faze of

the business. Of almost 660.000 DKK expected cash to be needed to pay for resources more

than half, or about 330.000 DKK, lies within the first two months of business. And this is

before the Lady Case has even reached the stores. The largest posts are the procurement of the

casings and the marketing expenditure. The casings must be ordered in bulk 2 months before

delivery the first time and 1, 5 months ahead post-launch with payment terms 30 days net142.

This time-lag forces the entrepreneur to hold stock which binds capital and increases cash

needs, as can be seen in the cash-flow statement appendix L and the income statement

appendix M. The first marketing effort is registered as an investment, as can be seen in the

balance sheet appendix N, because much of the results is something tangible, such as stands

for the casings or the homepage, which will be a resource over time for the entrepreneur.

As discussed in the price section it is assumed feasible that the entrepreneur alone can

negotiate a price of 35 DKK-30 days net, which means an end sale-price of 59 DKK including

mark-up and VAT. Matas is a big chain with a lot of buyer power and should be good

negotiators. To protect their own liquidity they will not pay for a product until after it has

been sold from the store143. These harsh payment terms are reflected in the overview in

appendix K as well as in the different results of the financial statements.

The financial leverage of the Lady Case can be measured in different ways, but in essence it

reveals how much the debt influences the return for the equity owners in different times144.

Analysing the long-term debt ratio of the Lady Case shows that in year 1 0, 20 DKK of every

Danish crown is in the form of long-term debt. This ratio declines throughout the two

following years to 0.06 in the second year and 0.03 in the third year. This is due to the

repayment that starts in year 2. Looking at it from a total debt to assets perspective the start-

up is financed with 25% debt the first year, 9% the second year and 4% through the third year,

meaning also that 75%, 91% and 96% is financed through owners equity in those same years.

Should more heavy investment be set in and dividends be paid it is possible that more loans

will be taken to finance a larger growth. However, looking at the earnings potential as seen in

142 Titoma, E-mail, Quote from Olsson M, 2009 143 Loreal, Egrrup Nanna – Trainee, Phoecall, 2009 144 Brealey et al, Fundamentals of corporate finance, 2004


54

the income statement, appendix M, much can be employed towards generating greater

expansion without taking additional loans.

Taking a closer look at the liquidity-potential of the start-up we again return to the balance-

sheet in appendix N taking the current liabilities and deducting it from current assets to get the

net working capital resulting in about 757.000 DKK for year 1.609.000 DKK for year 2 and

2.608.000 DKK for year 3. Looking at it as a proportion of total assets gives 89% for the first

year, 96% for the second year and 98% for the third year. This liquidity may seem unusually

high, however the financial statements are held constant on growth through sales via a chain

in Denmark, and does not include dividends and further investment calculations. The

calculation is done to give an overview over the potential of the Lady Case and it gives an

indication of how much capital that can either be reinvested in the company to be used for

further growth activities or as dividends for the owner, and the results show substantial

possibilities for this. It should also be noted that to extract all earnings as dividends is not

considered a feasible course of action to be sustainable in the long-run.

A sales average ratio can be calculated to show how much a crown of assets produce,

measuring the efficiency of the assets employed145. This has been done by taking the yearly

sale from the Income statement and dividing it through the average of total assets from year 1

to 3 in the balance sheet. For every crown of asset 0, 56 DKK is produced in the first year, 0,

98 DKK in the second year and 1, 2 DKK is produced in the third year. This indicates that the

assets are not being pushed to the limit of capacity, especially not in the first year though this

is more due to the start-up faze with low initial sales and high asset investment. But it does

leave room for improvement.

Evaluating how much of the start-up investment and total costs of 17, 9 per unit is needed to

support 1 DKK of sales the first year it is found that at the sales price of 35 DKK 0,39 DKK

of the initial investment and 0,51 DKK of the total cost is employed to carry 1 DKK of sales.

This is an acceptable ratio since it indicates a profit potential of 49% per unit sold and a

relatively low start-up investment cost per unit. Considering the inventory turnover where cost

of goods sold is divided through average inventory yield a 1, 53 turnover in the first year, 2,

66 in the second and 3 times in the third year. The low turnover in the first year is especially

145 Burns, Entrepreneurship & small business, 2001


55

due to the first 2 months where no sales were made and the initial inventory investments were

high. The turnover in the second year is acceptable and in the third year it is beginning to be

very good.

Moving on to the profitability of the venture the net profit margin, which shows what portion

of the revenue that finds its way into profit keeps itself around 50%146. This is a very nice

profit margin, but the Lady Case is also a low cost/high priced product which yields a high

profit margin. Another way to measure the performance of a company is to look at the return

on assets where interest paid is added back to net income from the income statement as seen

in appendix M and then divided with average assets from the balance-sheet in appendix N. In

this case it yields a 28% return on assets the first year, 52% the second and 60% return after

the third year. The two last year’s return on assets is quite high and quite correctly it indicates

a high pricing of the product, this will continue as long as the Lady Case is alone on the

market.

The return on equity in this start-up is also quite high, again especially after the first year of

low sales and high investments are over with. The first year the return is calculated to be 30%

the second year 56% and the third year the return is 66%. This number is also very high

because all earnings have been ploughed back into the company, and none has been taken out

as dividends. This is not realistic in the long run. It should also be noted that when capital is

taken out of the company a higher tax rate applies; 30% for the company in addition to the

personal taxes one can be subjected to147.

Expansion opportunities

Not investing more in the future and not giving out dividends is as said not realistic, but the

retained earnings does show the possibilities of what can be done should the company want to

expand and grow even further. The company can expand its market shares, not just in

Denmark but also in the world - like discussed in the general market & industry segment. It

would probably be best to start with psychologically close countries like Sweden and Norway,

perhaps even Germany. There can also be introduced different casings, a cheaper one in black

and other designs and sizes at different price-ranges, maybe there is even a market for a

146 Brealey et al, Fundamentals of corporate finance, 2004 147 Startvækst.dk, E-resource, 2009


56

luxury version. The line of products can also be expanded to tampon-tubes, casings for panty-

liners and one for birth-control pills. The opportunities are vast and the growth potential great.

The Break-even point

The break-even point defines how much revenue must be made for all the costs to be covered.

No profit or loss has been made but opportunity costs of capital have been paid148. Taking

point in the sales price of 35 DKK it gives a contribution of 26, 3 DKK after deducting the

variable cost of 8, 7 DKK. The variable cost includes production, toll and delivery costs. The

fixed costs identified to be 220.834 DKK before tax including depreciation, interest payments,

warehousing etc. More specified cost calculations can be seen in the pricing discussion.

Calculating with a tax of profit of 25% the break-even point is found at 8.397 casings and

taking the cost of capital of 10 % into consideration as well as the tax increases the break-

even point to 9.918 casings. In both scenarios less than half of the first batch needs to be sold

to cover the costs incurred. Again applying Matas’ 295 stores as an example, it implies a

minimum sales of 29 casings per store throughout the year at the lower break-even point and

34 casings a year per store where cost of capital has been included. It is the higher ratio that

gives a more correct view of the real break-even point. As long as consumer is made properly

aware of the product and it is placed in a visible way, 34 casings per store and year does not

seem like an unfeasible scenario. Especially not when taking the very positive reactions and

results of the surveys into account. Since the first year consists of only 10 month of actual

sales and it is in the start-up phase only 28.000 are expected to be sold, however this would

still reach well above the break-even point of 9.918 casings.

Answering the critical issues of Sahlman149, it is difficult to say how much it would cost

precisely to acquire a customer in the start-up phase but making a simple calculation on

40.000 units sold through Matas, seeing the mark-up of 35% that Matas makes as cost to

reach the customer then adding the marketing costs would yield a cost of about 15 Danish

crowns per unit sold and customer acquired. The time it takes to acquire the same customer is

even more complex to compute since the product is new and there is no knowledge of it in the

market. However, due to the simplicity and generic component of the product the adaption to

it should not be lengthy. The rate of sale will of course be slower in the beginning and then

148 Smith & Smith, Entrepreneurial finance, 2004 149 Sahlman, How to write a great business plan, 1997


57

accelerate as the knowledge increases and the word is spread so to speak. The decision to buy

is still pretty much made in-store so visibility is key. The renewal rate is, as discussed before,

about once every 5 to 7 years, and as long as there are no real substitutes and the casings

quality and design holds as predicted there are few reasons as to why the customer would not

come again. However, as soon as a competitive product is on the market customer loyalty will

be hard to produce. A better design than the competitor and an equally or close to competitive

price is needed to sustain the renewal rate. Keeping a good design, quality, functionality and

price would all help to generate brand-loyalty according to Kotler150.

The Cash-flow statement which tracks the movements of cash in or out of the business gives a

good indication of how much cash is generated throughout the year and shows if you have

over extended yourself liquidity-wise151. A way to perform a short cash-flow analysis is to

compare receivables and payables at the end of each month; a negative answer reveals that a

potential cash-flow problem is approaching152. Taking point in the cash needs generated it

would indicate a lack of almost 50.000 DKK cash in the third month after most investments

have been executed but no revenue has been generated, however, due to the initial

investments of cash there is sufficient funds to cover these expenses. Though, at this point

some sales generation becomes imperative to be able to handle liquidity, should no sales be

made the start-up would be illiquid within the fifth month after start. Looking at the yearly

cash-flow, it is positive throughout the three years shows that there is a good capacity to

handle fluctuating cash needs and that the start-up is able to stay liquid over the time.

150 Kotler, Marketing Management, 2003 151Smith & Smith, Entrepreneurial finance, 2004 152 Brealey et al, Fundamentals of corporate finance, 2004


58

Summary of the Opportunity analysis

Table 4: Key points – The Opportunity

Aspect Summary Notes Opportunity

Potential

Market Potential Large global growth potential High

Industry structure

Presently reasonably attractive Medium

Survey response Very positive product response High

Product Generic product, low production cost High

Place Through chain - high customer access, low

distribution cost

High

Price Premium price based on demand, costs and

competition

High

Promotion Broad audience, premium position, clear

promotional aspects

High

Expansion opportunities Through scale, scope and diversification High

Financial projections Low cost against high sales margins gives

good profit potential

High

The market for the Lady Case has been found, as illustrated in table 4, to have huge global

sales and growth potential and the industry structure is presently quite attractive with no

active direct competitors and high profit potentials. The access to a large customer base to

leverage economies of scale is vital for the success of the product and is identified as the

highest barrier to entry in this industry.

The overall result of the quantitative survey showed a very positive response towards the

Lady Case concept where over 90% thought it was an interesting product. The general sales

segment for this product are women between 12 and 50, however the group 21 to 35 have


59

been identified as the main target segment. This segment exhibited high irritation experience,

high interest for the product, and high buyer potential.

The Lady Case as a product is generic and based on the findings from the surveys made it

would, to begin with, come in one size and one colour, silver light metal with inscriptions.

This product is a low cost item to produce; the variable cost has been found to be 8.7 DKK

and the total cost per unit 17.9 DKK. The most attractive place of sales in terms of economies

of scale, distribution and customer access and satisfaction, has been identified, as illustrated in

table 4, to be through a more accessory oriented chain of stores. This mode would require a

large quantity of stock binding capital and yield a lower sales price, however it would be

saved in cost reduction, a more certain access to customers and hence less risk. The sales

price has been established based on the potential demand, the product costs and the

competitive situation of the Lady Case concept. For this project it is assumed that the

entrepreneur can negotiate a premium price of 35 DKK, which implies an end sale-price of 59

DKK where over 50% of the potential customers are captured.

In terms of promotion the Lady Case is positioned as a good design and quality casing for a

moderate premium price (about 20-25%). Following the findings in table 4, the clear

promotional aspects of the casing are the protective feature, which is the number one benefit

of the Lady Case, and the discretion feature, which is also seen as a central benefit. The

design has been identified as a success criterion for the Lady Case, other important factors for

purchase is value for money, shopping convenience and high quality.

Looking at the financial projections the venture has good liquidity, inventory turn and

financial leverage but the asset to sales leaves room for improvement. The break-even point

including cost of capital is found to be 9.918 casings, which implies a yearly sale of 34

casings per store when employing the Matas example. The cost of acquiring said customer has

been assessed to be 15 DKK per consumer, and the renewal rate about once every 5 to 7

years. The expansion opportunities exhibits great potential, the company can expand its

market-shares globally, and it can also introduce different casings with other designs, sizes

and price-ranges. The line of products can also be expanded to tampon-tubes, casings for

panty-liners and for birth-control pills, etc. As depicted in table 4, considering the revenue and

cash-flow stream, the net income and potential profits that can be generated from such a low

cost/high margin product, the viability of the idea and concept is confirmed.


The Risk & Reward of the Lady Case concept

Focus & Short summary of the Risk & Reward

Following Sahlman’s framework the R

futures and the actions and reactions from the players involved

mind153. The effect of “the people” and “the context” ha

delimitations of the paper. It considers

defendability perspective.

Even though the concept viability has been confirmed,

6 & 7, page 66 & 67, in the short

the investments, indicating a

payment structure and the poor overall defendability of the Lady Case

able to sustain an entrepreneurial start

Concept Viability in relation to Risk & R

When considering the revenue

can be generated from such a low cost/high margin product

concept is confirmed. This is further supported by looking at the Net Present Value of the first

three years in business for the venture

computed in relation to the opportunity cost of capital which in this project was found to be

10%, and NPV=PV- Investment meaning 1

clearly a positive outcome.

153 Sahlman, How to write a great Business Plan, 1996 & 1997

“The Lady Case”

60

of the Lady Case concept

ummary of the Risk & Reward analysis

s framework the Risk & Reward section discusses

and the actions and reactions from the players involved with the opportunity in

. The effect of “the people” and “the context” has been excluded following the

It considers the risks and rewards involved from a viability and

viability has been confirmed, the rate of return, as illustrated in

, in the short-run shows a high probability of getting a negative ret

indicating a very high risk to enter. Due to the high risk of entrance, the

payment structure and the poor overall defendability of the Lady Case it is

able to sustain an entrepreneurial start-up in the long-run. (Full summary p. 67

in relation to Risk & Reward

hen considering the revenue and cash-flow stream, the net income and potential profits

from such a low cost/high margin product the viability of the

This is further supported by looking at the Net Present Value of the first

three years in business for the venture where the end year cash-flows from appendix


Investment meaning 1.723.859-385.000=1.338.859 DKK which is

reat Business Plan, 1996 & 1997

CBS 2009

es different feasible

with the opportunity in

been excluded following the

the risks and rewards involved from a viability and

as illustrated in table

of getting a negative return on

Due to the high risk of entrance, the

it is most likely not

(Full summary p. 67)

, the net income and potential profits that

the viability of the idea and

This is further supported by looking at the Net Present Value of the first

from appendix L are


859 DKK which is


61

Table 5: Time to potential positive cash-flow Intermediate sales – 28.000 units

Excluding the initial investments it can be seen in table 5 that the cash-flow should turn

positive around the year end and then from there continue upwards with a few 100.000 DKK

the following years. Due to the staged ordering set-up, if the sales for some reason would not

go as planned, there is an option to abandon after the first batch of 20.000 is ordered. All in all

about 464.000 DKK will be invested at this point, however, further cost of procurement,

warehousing and extra expenses would be “saved” in comparison if 40.000 would have been

ordered simultaneously, which is about 220.000 DKK for the first year154. In table 5 the

payment of the second batch corresponds to the second downturn of cash-flow in the middle

of the year.

A concern with this plan is the issue of subjectivity and of the optimism or scepticism of the

entrepreneur who creates the forecasts, especially when it comes to projecting sales. As

Sahlman communicated; detailed financial projections for a new company are pretty much an

act of imagination155. If the demand of the Lady Case would be higher than expected the

possibility to order more is always available, it is first after a few 100.000 boxes per month

that supply as such can become an issue156. However, a liquidity problem might occur,

especially if the extra orders need to be placed early in the first year, though this can perhaps

154 Smith & Smith, Entrepreneurial finance, 155 Sahlman, How to write a great business plan, 1997 156 Titoma, Phone call, Quote from Olsson M, 2009

-400000

-300000

-200000

-100000

0

100000

200000

300000

Mo

ne

y D

KK

Time - year 1

Time to potential positive Cash-flow

Cash-flow


62

be solved with a bank loan which would be prudent to discuss with the bank beforehand. If

the demand would be too low it would take much longer for the cash-flow to turn positive, if

at all. Holding the investments constant there would be sufficient funds to handle a sale of

10.000 units the first year meaning a sale of 34 casings per store; however no orders can be

made until end of October if liquidity is to be held. The entrepreneur could choose to inject

more money into marketing to create higher awareness of the product and through this

increase sale. However, deducting the investments, the cash-flow during the first year would

never turn positive, and if sales would not pick up the venture would be out of business by

year 2. In the event that there would be essentially no demand for the product it is perhaps

generic enough to be sold with other purposes, i.e. it should have some residual value. It can

probably be sold at a little less than cost as a make-up or jewellery casing to cover for some of

the investments made. But again, leaning on the results from the surveys and considering the

channel used to access the customer these low-sale or no-sale scenario on its own does not

seem like any larger threats about to come true. Returning to the positive Net Present Value of

this venture, “The NPV rule states that managers increase shareholders wealth by accepting

all projects that are worth more than they cost. Therefore they should accept all projects with

a positive Net Present Value”157

. Following this rule the Lady Case concept should be

launched.

Risks & Reward - Defendability

The SWOT analysis, which is illustrated in appendix O, revealed opportunities already talked

about like world market potential, further product development and product differentiation.

However, it has also shown some threats concerning the opportunity that need to be

considered more closely in relation to possible product launch. Should the consumers change

their protection habits in great volumes and switch to another protection product like “The

Diva Cup”, the utility of the Lady Case would be limited. However, as discussed previously,

this product is reusable and needs to be washed by the wearer making the appeal less strong,

and it does not seem feasible that this product would pose a great threat to neither the tampon

nor sanitary napkin markets. Though, if the change occurs it could perhaps be possible to alter

the design of the Lady Case to fit “The Diva Cup” to serve the same use. There is also a risk

that accessories go out of fashion, however, the Lady Case serves first and foremost a

protective purpose and should still be able to market and sell on the functionality. Reversely,

157 Brealey et al, Fundamentals of corporate financing, 2004, Page 181


63

should a change in packaging occur that would fix the issues of easy breakage in the bag the

Lady Case could be sold on the accessory function that would keep it more discreetly in the

bag.

Overall the biggest immediate threat identified for the start-up is the potential competitor

entrance in the market. This raises the question of how big this threat really is. In the light of

the information retrieved from the analysis, taking point in the Porterian competitor analysis

made previously, Baumols concept of Contestable Markets158 is considered.

Contestable Markets

A market where many firms can enter quickly and easily, without any entrance barriers, if

price exceeds costs and can exit rapidly, without high costs or exit barriers, should the price

drop below cost is called contestable. In a perfectly contestable market price equals marginal

cost and strategic behavior is irrelevant, though there are few known examples of such

markets159. Baumol identifies another 3 criterions, in addition to the rule of no entry or exit

barriers, which need to be fulfilled for a market to be contestable160. First of all the entering

competitors can serve the same market demands and use the same production techniques as

the incumbent, in this case the entrepreneur, which is true in this situation. Furthermore, the

competitor must evaluate profitability on pre-entry prices - even though being aware that

prices go down when supply goes up. It would be difficult for the start-up to cover the entire

market leaving space for other entrants. The profit margins also leaves room for lowering the

prices somewhat and still make money. Finally the customers’ perception of the desirability

of the product must be the same. Should exactly the same design be sold the desirability

would be the same, with two different designs and brands the desirability should also differ.

At first glance the Lady Case market does seem contestable, however if falls with the

condition of costless entry and exit of firms in the market. Baumol defines barriers to entry as

“anything that requires expenditure by a new entrant into an industry, but imposes no

equivalent cost upon an incumbent”161, he also sees sunk costs as barriers to entry since it will

make it expensive to exit, furthermore a threat of retaliatory action from the incumbent is seen

158 Baumol, Contestable Markets and the Theory of Industry structure, 1982 159 Carlton & Perloff, Modern Industrial Organization, 2005 160 Baumol, Contestable Markets and the Theory of Industry structure, 1982 161 Baumol, Contestable Markets and the Theory of Industry structure, 1982, Page 282


64

as a barrier which can be in a form of aggressive pricing or getting the competitor involved in

legal issues being both expensive and time consuming, or the like. The success of the Lady

Case hinges on the access to customers and a possibility of volume sales. This means that the

potential entrants must be able to gain access to many sales points and be able to handle the

logistical supply either by doing it themselves or by selling the same way as the start-up –

through a chain which handles its own logistics. If the entrant cannot secure a deal with a

chain, there are after all a limited number of chains and not all products would be allowed to

be sold through them, or does not have its own channels build up there would be big

investment needs in these areas leading to high potential losses at a rapid exit. Selling through

a chain the payment structure where payment is collected after the in-store sale, also makes

investment a necessity since inventory must be held. For entrants and the entrepreneur this

would indicate that an exit from the market would leave them with a warehouse full of

casings which if not sold in a different way would be a lost investment or in another word a

sunk cost. Not to mention cost of design, prototypes with moulds, marketing costs paid etc.

Taking a big business perspective there is not a lot of money involved in these losses, but for

a start-up strapped for cash switching product lines or industry is not something that can be

done easily and at no cost which indicates that the market is not completely contestable162.

However, returning to the competitor analysis earlier in the project, for companies already in

the industry with the sales machine and logistical arm already in place or for firms that have

the same access opportunities as the entrepreneur the barriers to entry is lowered significantly

and are still the biggest threat to the success of the start-up. Since the Lady Case cannot be

protected by a patent legal actions cannot be used as deterrent or protection against entry. It is

also debatable how effectively the entrepreneur could enforce the patent on a global scale,

should there have been one, since legal actions are very complex, takes time and can cost vast

amounts of money to follow through on - but on a smaller scale it should be effective. Other

protections like process skills or specific know-how needed to launch this product is not very

difficult for a firm to absorb and is not a high entry-barrier. Furthermore it would be very

difficult for the entrepreneur to threaten with retaliatory actions as protection against entry,

especially not against a larger firm, since its size and capital backup is not large enough to

create any serious threat. There is no denying that the barriers to entry and exit are quite low,

especially for the firms within the industry, and that the profit potential does invite

162 Baumol, Contestable Markets and the Theory of Industry structure, 1982


65

competition. Sahlman’s thoughts on the perfect business are where you can “buy low, sell

high, collect early and pay late”163. In this venture it is bought low and sold high but not

collected very early or paid very late. This in combination with the knowledge that if

competitors would enter the profit potential would be altered significantly in a negative

direction since a higher supply generally leads to lower prices indicates a potentially

unattractive future market structure which inhibits growth and profit potentials of the Lady

Case.

One issue that could present a challenge for the entrants is importance of design; The Lady

Case is a concept that needs to be sold in the right way. To simply make some cheap casings

and practically throw those against the consumer will take a share of the market but there

should still be a significant amount of consumers, as the survey shows, that are willing to pay

for good design and quality. This is more difficult to copy, and it takes more time for a

company to set up operations and get into the business. The most probable competitors to

enter the business would probably be one or several of the conglomerates. Procter & Gamble,

Kimberly-Clark or SCA are just examples of a feasible entrant. This is due to their access to

customers, the related products they carry and the fact that economies of scale can be

employed with enough capital to defend a position. It is not always so, but in this case size

does matter. The profit potential for a larger firm is potentially greater than calculated in this

project since they should have more buyer-power, a better logistical set-up and more funds to

reach a greater market. Intuitively they should also be better negotiators which can perhaps

give them better prices, payment terms or the like. In theory the retailer could also get into the

market but that would mean taking on all the risk and have capital bound in inventory, it is

probably more feasible that they focus on their sales competencies where they have their

strength and leave the production and most of the risk to the supplier.

With that said it is not considered realistic that one firm would have a natural monopoly and

have complete access to all relevant markets and be able to supply the global amount needed

cheaper than all others, where price equals average cost, when thinking about cost of

transport, future investments in facilities, etc. But since it is a more or less generic product

which profits from economies of scale, does not need a big post-sale support system and with

a position that needs a lot of muscles to defend it implies an intermediate level where a few

163 Sahlman, Some thoughts on business plans, 1996, Page 9


66

large firms compete for profits though without having all the properties of a completely

competitive market164.

The analysis has revealed that in the event of a larger entry of competitors there are few things

that the start-up can do to protect its concept and market shares. And even though the market

has been found not to be completely contestable Baumol165, as with Porter166, still makes an

important point; as long as there is a feasible potential profit to be captured and the risks

involved are manageable, the risk of a competitor entering is high. Due to the high risk of

entrance, the long-run sustainability for the entrepreneurial start-up is most likely not a

feasible outcome, however in the short run the issue of information-lag comes into play. The

information flow in today’s society is quick but it is far from instantaneous, which would give

the entrepreneur the possibility to reap the profits from the new concept at least in a short term

perspective. The question is how long it would take the potential competitors to realize the

value of the concept and then to develop the product and finally to bring it to the market.

Kotler affirms that companies, especially the larger ones, sweeps the market is search of

potentially good ideas.167 With this in mind one can speculate that it does not seem

unreasonable that it would take less than 3 months, maybe as little as 1, before someone “in

the right firm” recognized the potential of the Lady Case after its launch. From this point it

would probably take another 2 to 4 months to develop their own product with delivery

capabilities and to have it ready for the market, taking project approval, delivery-time, design

issues and marketing plans into consideration. This timeline is considered reasonable based on

the time needed and used to develop the Lady Case concept and reduced somewhat since the

idea can be copied and a larger firm should have more efficient set-ups for such development.

This gives an interval of 3 months as worst case scenario, and 6 months as best case scenario

where anything in between is a possibility. This indicates that there is room for only one batch

order of 20.000 units for the entrepreneur, which would lead to higher cost per unit and a new

break-even point at fixed cost after tax of 10.033 casings sold.

164 Carlton & Perloff, Modern Industrial Organization, 2005 165 Baumol, Contestable Markets and the Theory of Industry structure, 1982 166 Porter M, Competitive Advantage, 1985 167 Kotler, Marketing Management, 2003


67

Assuming that the costs stay the same throughout the year the span of profit potential before

tax is between -215.996 in the sixth month of operations, adding the yearly cost and sales of

that month and deducting investments, and 94.951 DKK in the ninth month of operations

following the first year of sales as illustrated in appendix K. However, it is far from certain

that the competitor would be selling through the same channel and some sales should be

expected in the months to come, a sale of half the expected amount for the two following

months is not considered unreasonable. This would lead to a potential profit span of -119.746

DKK in month 8 and 226.201 DKK in month 11 and leave the entrepreneur with over 10.000

casings to be sold in the first scenario and 250 casings in the last scenario. It is possible that

the 10.250 casings can be sold either more slowly through Matas or to someone else with a

different purpose, but in this calculation it is assumed to be a sunk cost. The possibility that

either extreme of 3 or 6 months to enter would occur is quite small since it does take time to

create not only a product but a concept to sell, but the entering firms which are assumed to be

quite large still has a lot of manpower and capital to make things move. Due to this it is

considered most feasible that entry will happen between the points of 3 to 6 months.

Another way to attempt to delay entrance would be to lower the prices from the start,

lessening the incentives for a potential competitor. However, even if this would probably

increase the initial sales they would still be low due to poor customer awareness and the

profits from the extra sales would be eaten up by the lower price received per unit which

discourages the use of this technique.


68

Table 6: Probability of Rate of return

Table 6 illustrates the probability of acquiring a certain level of rate return for the Lady Case

start-up through the first year. This shows a high probability, almost 40%, of getting a

negative return on the investments and a lower probability, less than 35%, of making any

positive return at all. Since the probability of return plummets when looking at the

sustainability in the long-run it would be a high risk taking to enter into this venture. And

should entry be made there are few exit plans available, the literature suggests options like

IPO, selling the company or merge with another168, which would all be difficult or impossible

since the company has no real special know-how or assets that can be of interest post-

entrance. One option would be to shut down operations, the other to attempt to sell the shell to

another party – perhaps to produce something similar that would need to go through the same

sales channels. Then the one thing the venture could offer would be possible contacts to

suppliers and sales channels, though it is not very likely a relevant price could be obtained.

168 Smith & Smith, Entrepreneurial finance

0%

5%

10%

15%

20%

25%

30%

35%

Pro

ba

bil

ity

Rate of return first year

Probability of Rate of Return

Probability


69

Summary of the Risk & Reward analysis

Table 7: Key points – Risk & Reward

Aspect Summary Notes Risk & Reward

Potential

Net Present Value Positive for first three years of business High reward

Higher demand than

projected

Can deliver up to 200k a month, issues with

liquidity can arise early in the year

High reward

Lower demand than

projected

Can survive at 10.000 first year, issues of

survival year 2

High risk

No demand for product Possible residual value of product High risk

Competition High risk of entrance of large players High Risk

Protection of product No patent or special know-how and no threat of

retaliation

High Risk

Industry structure Not attractive, high future risk of low profit High Risk

Market Not contestable, strategic behavior relevant High Risk

Financial projections Very low long-run profit potential, rate of

return shows high short-run risk

Low Reward/

High Risk

As can be seen in table 7, the viability of the concept is supported by the NPV of the venture.

Looking at the different scenarios of sale it is found that should the demand be higher than

expected there is capacity to handle it though liquidity may become an issue if it is early in

the first year. Should the demand be lower than expected, down to 10.000 units would be

survivable however if nothing is done and the low sales would continue there would be issues

of survival in year 2. If there would be no demand for the product it could perhaps have some

residual value and be sold as e.g. a make-up or jewellery casing to cover some losses. In terms

of viability the Lady Case formulates a good deal worth going for.


The biggest immediate threat identified for the sta

potential competitor entrance in

made previously, Baumols concept of Contestable Markets

failure to meet criterion of being able to switch markets without cost implies that the

market is not completely contestable

to be captured and the risks involved are manageable the risk of a competitor entering is high

The most probable competitors to e

conglomerates with capital, sales machine and logistical arm already in place.

The analysis has revealed, as depicted

competitors there are few things that the start

shares since patents cannot be applied, no real specific know

retaliatory actions would be too small.

collected very early or paid very late

risk of entrance, the payment structure and the poor overall defendability of the Lady Case the

long-run sustainability for the entrepr

however in the short run the issue of i

of 3 to 6 months where competitor entry is feasible. This indicates a potential profit span of

119.746 DKK in month 8 and 226.201 DKK in month 11. The rate of return in the short

shows a high probability, almost 40%, of getting a negative return on the investments and a

probability of less than 35%, of making any positive return at all indicating a high risk venture

to enter.

169 Baumol, Contestable Markets and the Theory of Industry structure, 1982170 Baumol, Contestable Markets and the Theory of Industry structure, 1982

“The Lady Case”

70

The biggest immediate threat identified for the start-up, as illustrated in table 7

potential competitor entrance in the market. Taking point in the Porterian competitor analysis

made previously, Baumols concept of Contestable Markets169 is considered, however the

failure to meet criterion of being able to switch markets without cost implies that the

pletely contestable170. Though as long as there is a feasible potential profit

to be captured and the risks involved are manageable the risk of a competitor entering is high

The most probable competitors to enter the business would be one or several of

lomerates with capital, sales machine and logistical arm already in place.

as depicted in table 7, that in the event of a larger entry of

competitors there are few things that the start-up can do to protect its concept and mark

patents cannot be applied, no real specific know-how is needed and threat of

retaliatory actions would be too small. In this venture it is bought low and sold high but not

collected very early or paid very late which is a flaw in the payment structure


run sustainability for the entrepreneurial start-up is not seen as a feasible outcome,

however in the short run the issue of information-lag comes into play. This gives an interval

of 3 to 6 months where competitor entry is feasible. This indicates a potential profit span of

119.746 DKK in month 8 and 226.201 DKK in month 11. The rate of return in the short

ability, almost 40%, of getting a negative return on the investments and a


and the Theory of Industry structure, 1982 and the Theory of Industry structure, 1982

CBS 2009

up, as illustrated in table 7, is the

the market. Taking point in the Porterian competitor analysis

is considered, however the

failure to meet criterion of being able to switch markets without cost implies that the the

as long as there is a feasible potential profit

to be captured and the risks involved are manageable the risk of a competitor entering is high.

be one or several of

lomerates with capital, sales machine and logistical arm already in place.

in the event of a larger entry of

up can do to protect its concept and market-

how is needed and threat of

In this venture it is bought low and sold high but not

t structure. Due to the high


a feasible outcome,

lag comes into play. This gives an interval

of 3 to 6 months where competitor entry is feasible. This indicates a potential profit span of -

119.746 DKK in month 8 and 226.201 DKK in month 11. The rate of return in the short-run

ability, almost 40%, of getting a negative return on the investments and a



71

Findings & Further discussions

Focus & Summary of the Findings & Further discussions

This section will clarify the findings of the analysis and discuss the delimitations applied, it

will also look into the impact of the launch of a similar product in relation to the Lady Case

and finally further research needs are discussed.

Taking point in the Risk & Reward analysis from an Opportunity perspective, it can be

concluded that even though the concept viability carries very high potential the concept holds

too much risk due to its poor defendability and is not a sustainable solution in the long run for

a start-up venture. The Libresse launch, from an opportunity and risk & reward perspective,

raises the barriers to entry and the risk of entry is now even higher than before. However, the

results of further analysis surrounding the people and the context of Sahlman’s framework

could perhaps alter the outcome this analysis and further research is suggested171.

Furthermore, a more thorough investigation of the relation between the elements and the best

methods for answering the questions posed by Sahlman is suggested. Finally, applying a

pragmatic theory like Sahlman’s can create new knowledge in regards to the way

entrepreneurs perceives their true opportunities.

Findings

The positive attitudes found in the surveys made, in combination with the similarity in

packaging, a huge market of the sanitary napkins and tampons and a generic design creates a

great global sales and growth potential for the Lady Case. Looking at further expansion

opportunities it also exhibits very encouraging potential; the company can introduce different

casings and line of products can also be expanded.

The access to a large customer base, good logistics and the design of the casing has been

identified as key drivers for success of the concept and the most attractive place of sales in

terms of customer access and satisfaction, has been identified to be through a more accessory

oriented chain of stores. The payment structure of this venture has a disadvantage; it is bought

171 Sahlman, How to write a great business plan, 1997


72

low and sold high but not collected very early or paid very late. However, considering the

above in combination with the positive revenue and cash-flow stream, the net income, the

NPV and potential profits that can be generated from such a low cost/high margin product, the

viability of the concept is confirmed.

The biggest immediate threat identified for the start-up is the potential competitor entrance in

the market. The analysis has revealed that in the event of entry of a large competitor there are

few things that the start-up can do to protect its concept. Due to the high risk of entrance, the

long-run sustainability for the entrepreneurial start-up does not seem like a feasible outcome,

however in the short run the issue of information lag comes into play. The rate of return in

the short-run shows a high probability, almost 40%, of getting a negative return on the

investments and a probability of less than 35%, of making any positive return at all indicating

a high risk to enter.

Taking point in the Risk & Reward analysis from an Opportunity perspective, it can be

concluded that even though the concept viability carries very high potential the concept holds

too much risk due to its poor defendability and is not a sustainable solution in the long run for

a start-up venture.

Discussion of Delimitations

Focus

Due to the restraints of time and space in this paper two of Sahlman’s cornerstones, “the

people” and “the context”, were not explored. This leaves many questions unanswered and as

examples can be mentioned; could the right people conceivably have secured an alliance with

one of the larger companies, or raised enough money to be competitive in the market? Could

the right people have found another way to stay competitive in the market? Could those

people have been recruited to run the new company? Could the context have given any further

protection or posed more dangers to the project in terms of legislation -import/export/antitrust,

etc? Could a Business Angel have been a better choice as investor and would that have

altered the results? The results of further analysis surrounding these two cornerstones could

perhaps alter the outcome of how viable and defendable the Lady Case is as a concept and

whether or not it is sustainable in the long run.


73

Data collection

Basing the data collection on the Danish market means that the tastes and preferences

exhibited are local and even though it bear signs of being a potentially global product the

results can and probably will vary across nationalities and continents. A larger, more in-depth

survey could have given a broader overview of the preferences of not only different

populations but also the Danish one which would not be as much limited to the urban setting

and place of visit. However, the findings of the survey are still applicable to the Danish

market and to some extent to the larger context and do give a good base as to deciding

viability of the idea. The use of another language in the survey opens for the possibility that

something could have been lost in translation, however multiple persons, herein a bi-lingual

colleague, were drawn upon to attempt to minimize the potential of translational errors. The

translation issue could distort the outcome of the surveys in both a negative and a positive

way. It is also important to note that for the qualitative workshop the author was in the same

acquaintance sphere as the participants which could have affected the outcome either in a

negative way, inhibiting disclosure of the true feelings towards the product or in a positive

way where the participants felt safer with a known moderator and was more open in their

views.

Author partiality

Due to a natural bias the author will possible be more optimistic regarding the potential of the

business concept presented, and be more prone to disregard possible threats to prove its

viability since it is her own. However, employing the theories, the author has endeavoured to

relay the situation in a fair and equal way and has strived to remain as impartial as possible.

Post project perspectives

During the writing of this project Libresse launched a close version of the Lady Case, offering

it as an add-on when buying a package of sanitary napkins. This casing fits one normal-sized

bind, cannot be used for tampons, is not of good quality and has very dominant colours with

the Libresse logo on one side. It does provide the basic function of protection and is for “free”

(you would still need to buy a package of sanitary napkins to get one), however according to

the workshop participants, see appendix E for details, it does not appeal in design and the

colours and logo does still make it obvious as to what is in the casing in the purse.

Furthermore, it is somewhat too small, ideally it should be able to hold 2 normal-sized

sanitary napkins or tampons, and the feeling of the casing is very cheap.


74

This launch verifies that there is potential in the product idea, however it does move in to the

Lady Case territory and the question is if there is a possibility to still launch the Lady Case as

a “high-end” product where design and quality is what is paid for. Even though the “free”

casings exists, 3 out of 7 women from the work-shop, all from the younger segments, felt

certain they would rather pay for something “proper” than using the “free” casing from

Libresse while 2 were unsure , 1 would stick with the “free” casing and 1 would not use any

of the casings. This indicates that there is still a market for a concept like the Lady Case,

though it is now much smaller and more in the nature of a niche market. However, there is a

possibility that the free add-on is a strategy from Libresse to generate awareness for the

product and to attempt to create a need for the consumer. Based on this there could come a

casing with a better appeal within the near future. Using this strategy could also help to deter

possible competitors to enter since they are signalling interest in the market and the potential

profit would probably become very low. Of course it can also be that Libresse only will use it

as a way to create more competitive value for their sanitary napkins, however in the long run

the intended consumer would need far more sanitary napkins than the number of protective

casings that would come along in the purchase. This makes it difficult to believe that it is a

long run strategy.

With this in mind it is difficult to see any way that would make the Lady Case concept, from

an opportunity and risk & reward perspective, profitable neither in the short run nor the long

run without extremely high risk.

Discussion & Further research

Applying Sahlman’s theory reveals an interesting problem and hence a potential area of future

research. Sahlman thoroughly develops the conceptual content of each of the elements of his

theory. However, he does not extend the framework to include an in-depth discussion of the

relation between the elements and the elements and the final result. He only briefly mentions

an existing interdependence, and that the fit between the elements is vital when analyzing a

business concept.

Just to illustrate the potential, consider the following example-outline:

This Sahlman based analysis indicates an Opportunity rating of approximately 7 (out of 10)

and a corresponding figure of Risk and Reward of close to 0 (also out of 10). The importance


of the relationship between the parameters can be interpreted in two ways as illustrated in

table 8.

Table 8: Visualisation of Attractiveness

Depending on how the relationship is viewed, different results have been found. The second

result puts much more emphasis on the importance of risk and it provides a very different

starting point for evaluating potential entrance

Lady Case the second alternative has been deemed an appropriate approach, however,

judgment of the accumulated attractiveness is still

issue is suggested.

Furthermore, considering the results of the analysis of the Lady Case

framework172 does provide the important questions that need to be answered when

considering launching a new concept; however it does not offer all the tools to answer them.

This can create a weakness in the system since it does not really specify what is important to

consider when applying many of the models needed to generate

evaluation or financial calculations. This is left for the writer to do as best after ability.

Further research into the best methods for answering the questions posed is sugge

172 Sahlman, How to write a great business

“The Lady Case”

75


Attractiveness



starting point for evaluating potential entrance than the first result gives. In the situation of the

Lady Case the second alternative has been deemed an appropriate approach, however,

judgment of the accumulated attractiveness is still very difficult and further research into this

the results of the analysis of the Lady Case

provide the important questions that need to be answered when



der when applying many of the models needed to generate e.g.


Further research into the best methods for answering the questions posed is sugge

Sahlman, How to write a great business plan, 1997

CBS 2009




In the situation of the

Lady Case the second alternative has been deemed an appropriate approach, however, the

further research into this

the results of the analysis of the Lady Case, Sahlman’s

provide the important questions that need to be answered when



e.g. market plans, risk


Further research into the best methods for answering the questions posed is suggested, and an


76

extension of the framework should be created to assist in a better analysis and a more

structured outcome of the investigation.

However, the questions discussed by Sahlman do give a good indication of where to place

importance and he emphasises conservatism and the dangers of being overly optimistic. The

graphs of cash-flow potential and probability of rate of return has been put in place to give the

reader a fair warning should all common sense have been bereft the entrepreneur. In the end

applying a practical-oriented theory like Sahlmans173 can create new knowledge in regards to

what it actually takes to start and sustain a successful company and change the way

entrepreneurs perceives their opportunities.

173 Sahlman, How to write a great business plan, 1997


77

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81

Appendix A - Quantitative Survey

Survey questions

This survey has been prepared by a student at the Copenhagen Business School, as a

step in a master-project, to evaluate customers’ potential interest towards a new

intimate accessory product called the Lady Case. Respondents have been chosen

randomly for this survey and answers will be treated confidentially.

Demographical questions

Please mark appropriate answer with an X or specify when possible.

1. Age group: __11 and younger __ 12-20 __ 21-35 __ 36-50 __ 51-65 __ 66 and older

2. What is your current marital status?174

__ Unmarried __ Married

3. Family size of your household175

: __ 1 person __ 2 people __ 3 people __ 4 people

or more

4. What is the area-code of your current address?

5. Please indicate the highest level of education you have completed176: __ Gymnasial

or equivalent __ Bachelor graduate __ Master graduate

______________________________Other (please specify)

6. Which of the following describes you best177

? __ Student __ Employed

__ Homemaker __ Retired __ Not Employed

7. If you are employed please check the appropriate line: __ Farming, fishing

__ Industrial work __ Energy- & Water- supply __ Construction __ Trade, Hotel &

Restoration __ Transport, Postal service & Telecom __ Finance & Business service

174 Createasurvey.com 175 Surveyshare.com 176 Createasurvey.com 177 Createasurvey.com


82

__ Public sector _____________________________________ Other – please specify178

8. What is your annual income179

? __ Under 100.000 dkk __ 100.00 to 200.000 dkk

__ 200.000 to 300.000 dkk__300.000 to 400.000 __ 400.000 to 500.000 dkk __

500.000 dkk and above

Background information for product use

9. What protection do you use during your period? __ Sanitary towels (hygiejnebind)

__ Tampons __ Both ____________________________Other (please specify)

10. Do you carry sanitary towels or tampons in you purse for emergencies?

__ Yes __ No __ Do not use either

11. Have you experienced any problems or irritations with the sanitary towels or

tampons while in you purse? __ Yes __ No __ Do not carry them

The product180

Please read the following product description and respond to the questions below.

The problem that is addressed is that the packaging for sanitary towels and tampons are not

always durable enough when stored in a purse or handbag. It can also be difficult to find or

too easy for others to see in the purse.

The product is a designed casing for sanitary towels and tampons to carry in a woman’s

hand-bag. The casing will protect the packaging of the towels and tampons; it will also make

it easier to find in the bag. Furthermore it will make it more difficult for others to see what

you are carrying in the purse. The casing will come in different colours and two sizes, small

& large (“invisible” & “extra long”) and can room either sanitary towels or tampons.

178 Danmarks statistik, E-resource 179 Surveyshare.com 180 Createasurvey.com


83

12. Do you find the product interesting? __ Yes __ No

13. Have you heard of this product or something similar before? __ Yes __ No

If yes please specify:_________________________________________________________

__________________________________________________________________________

14. Which of the following best describes your need for a product like the Lady Case?

__ I need this or a similar product to solve this problem

__ I am indifferent, other products can solve this problem just as well

__ I don't see any reason why I should buy this product

15. If you would buy the Lady Case, what would be the most important factors in the

choice of product? Please choose up to three alternatives:

__ Value __ Best Performance __ Recognized brand name __ High Quality __ Shopping

Convenience __ Discount __ Design __Other (please specify)

__________________________________________________________________________

16. If you would buy the Lady Case, how much would you pay for it?

__ 25 to 50 dkk __ 51 to 75 dkk __ 76 to 100 dkk __ 101 to 125 dkk __ 126 to 150 dkk

__ Other (please specify) _________________________________________________

17. If you wanted to buy the Lady Case, which purchase place would you most prefer?

__ Purchasing Online __ Purchasing in the local super market __ purchasing in a more

accessory oriented shop __ Other

18. How often could you find a use for the Lady Case? __ Every day __ Once or twice a

week __ Two or three times a month __ Two or three times a year __ Would not use

19. Additional comments regarding the product?


84

Appendix B – Qualitative interview questions

Outline of questions and information need from telephone interview

Introduction of interviewer and product-idea

� Name, age*, marital status*, location and position of interviewee

� What are the potentials for patenting this product?

� Can you give examples of other possibilities for protection?

� How feasible do you think the idea is?

� What threats do you perceive for this product?

� Would you buy the product and if you would how much would you then pay?*

(partially closed question)

*Only asked if interviewee appears comfortable with situation

Appendix C – Summary of qualitative interview

Transcript – summary

Klingenborg Kristina, Telephone interview, Patent & Varemærkestyrelsen, 26.03.2009

Name: Klingenborg Kristina

Age (group): 21-35

Marital status: Married- 1 child

Position: Employee in the patent department of the Patent and Trademark association in

Copenhagen

After hearing about the product idea and thinking about possible ways to protect it, Kristina

rules patent out. The product is not innovative or specific enough for a patent. She continues

to elaborate on a Danish concept called a “Brugsmodel” patent, also known as “the small

patent”, which could be a possibility. The demands for innovativeness are less stringent, but

protection only lasts for 10 years. A “small patent” is not automatically verified but it can be

investigated. Either you do it yourself or you pay someone, e.g. the Patent and Trademark

association to do it for you. Here the interviewer explains that some groundwork has already


85

been done; a data-base search at the Patent and Trademark associations’ homepage has been

conducted using the following key-words: hygiejnebind (sanitary-towel), bind (short for

sanitary-towel), tampon, æske (box) and etui (casing). From the top of her head Kristina

thinks it sounds like most ground have been covered, but she also suggests that the search is

done again with multiple search words. She would like to help more but then it would have to

go through as a request at the patent department. Kristina also mentions a design-patent as a

way of safeguarding the product (from 5 years unless renewed), or a trademark protection of

the name or logo. However, based on what she has understood from the product-idea, none of

the mentioned protections would really stop anyone from going into the market with a very

similar product, using the same basic idea. And the “Brugsmodel” patent would still need to

be more specific than a generic casing.. Continuing on to how feasible the idea is for her, she

thinks it is a good idea but that she can only say that as a personal opinion and not a

professional. On the question if she would want one herself she answers yea and she would be

willing to pay between 50 and 100 dkk depending on design etc. When asked about perceived

threats she answers, as said before, that it is a product that is difficult to protect. Anyone can

copy the idea. Other than that, she does not know.

Appendix D – Workshop pre-session notes

Workshop 21/8-09 Topics of discussions & survey questions

After introductions of product idea/prototype

Points of interest (Open discussion):

What do you think about the product in terms of:

- General Idea

- Design

- Size

- Colour

- Functionality

- Price

- Place of purchase


86

Closed Questions for questioner:

1. Age group: __11 and younger __ 12-20 __ 21-35 __ 36-50 __ 51-65 __ 66 and older

2. What is your current marital status?181

__ Unmarried __ Married

3. Family size of your household182

: __ 1 person __ 2 people __ 3 people __ 4 people

or more

4. Please indicate the highest level of education you have completed183: __ Gymnasial

graduate or equivalent __ Bachelor graduate __ Master graduate

______________________________Other (please specify)

5. Which of the following describes you best184

? __ Student __ Employed

__ Homemaker __ Retired __ Not Employed

6. If you are employed please check the appropriate line: __ Farming, fishing

__ Industrial work __ Energy- & Water- supply __ Construction __ Trade, Hotel &

Restoration __ Transport, Postal service & Telecom __ Finance & Business service

__ Public sector _____________________________________ Other – please specify185

7. What is your annual income186

? __ Under 100.000 dkk __ 100.00 to 200.000 dkk

__ 200.000 to 300.000 dkk__300.000 to 400.000 __ 400.000 to 500.000 dkk __

500.000 dkk and above

Background information for product use

8. What protection do you use during your period? __ Sanitary towels (hygiejnebind)

__ Tampons __ Both ____________________________Other (please specify)

181 Createasurvey.com 182 Surveyshare.com 183 Createasurvey.com 184 Createasurvey.com 185 Danmarks statistik, E-resource 186 Surveyshare.com


87

9. Do you carry sanitary towels or tampons in you purse for emergencies?

__ Yes __ No __ Do not use either

10. Have you experienced any problems or irritations with the sanitary towels or

tampons while in you purse? __ Yes __ No __ Do not carry them

The product187

11. Do you find the product interesting? __ Yes __ No

12. If you would buy the Lady Case, what would be the most important factors in the

choice of product? Please choose up to three alternatives:

__ Value __ Best Performance __ Recognized brand name __ High Quality __ Shopping

Convenience __ Discount __ Design __Other (please specify)

__________________________________________________________________________

13. If you would buy the Lady Case, how much would you pay for it?

__ 25 to 50 dkk __ 51 to 75 dkk __ 76 to 100 dkk __ 101 to 125 dkk __ 126 to 150 dkk

__ Other (please specify) _________________________________________________

14. Do you think you would by this product if it was easily available and sold within

your indicated price-range? __ Yes __ No

15. If you wanted to buy the Lady Case, which purchase place would you most prefer?

__ Purchasing Online __ Purchasing in the local super market __ Purchasing in a more

accessory oriented shop __ Other

16. How interesting do you find this product? __ Very interesting __Interesting __ Not

interesting

17. Additional comments regarding the product?

187 Createasurvey.com


88

Appendix E – Summary of workshop discussion

Transcript Summary of the Focus Group Workshop discussion:

21.08.09

The Lady Case received mainly positive responses from the test-panel; all participants except

one (51-65) found the idea to be applicable and useful in the every-day life if the design and

price is considered acceptable. The design should be elegant and simple, maybe with some

inscriptions on it if it is a “hard-back”. It should be big enough to carry at least 2 medium-

sized sanitary napkins or 3 tampons also medium in size. However, it should not be so large

that it cannot fit into the purse or becomes too heavy to carry. It should be easy to open and

close but still not spring open in the hand-bag, this would be a major cause for irritation if it

did.

The general consensus regarding colours is that it should not be “too loud”, only one (12-20)

though a fire-engine red would be excellent. Mostly the preference was towards silver, black,

black velvet, or dark red or blue. The 12 to 20s seemed particularly partial to the black (and

red) version of the Lady Case while the 21 to 35s leaning more towards the silver casing with

inscriptions. The older groups were split between silver, black and velvet versions of the

product. All in all, silver was the most preferred design. The test-panel did not think it should

be gold or multi-colored. A suggestion is put forth to place a mirror on the casing to make it

look more like a make-up casing. This suggestion is received with mixed attitudes, since some

(1 12-20, 1 21-35, 1 36-50) thinks it is a bad idea to blend the two since it can be hard to tell

the difference, while others (1 12-20, 1 21-35, 1 36-50, 1 51-65) think it is a great idea.

Discussing the price the group is settled between 20 – 50 and 50-100 dkk approximately, the

participants feels it is very difficult to say without seeing the final product they would buy.

They all agree it depends on the design and “feeling” of the casing. If it feels good, the design

is appealing and the functionality good a much higher price would be paid (between 60-90

dkk) – individual answers were given afterwards regarding price and place of purchase. The

place of purchase is split between the supermarket (the older segment) and a more accessory

oriented shop (the younger segment). None thinks it is a product they would find and buy on

the internet. Everyone agrees that it needs to be easily accessible for them to buy it. It needs to

be “in their way, or “in their path” when shopping. The younger age-groups also feels that the

price is connected to where you buy it and the older groups agree to some extent. The 12-20s

and 21-35s feels they would pay more for a product like the Lady Case in a place like


89

“Matas” or “Accessories” than in the local supermarket. One of the 21-35s suggested selling

the Lady Case in the same way “Tupperware” or “Orriflame” (makeup) does it, through home

sales and local gatherings. All participants agreed that that could be an interesting solution,

however it should be noted that not one of them had ever bought anything from these methods

of sales, and when thinking about it the group (including the moderator) could only give name

to one person in the outer acquaintance sphere that sells in this mode - in this case selling

“Herbalife”.

Discussing why the women haven’t just bought a box or a casing that could in some way or

form fit as a sanitary napkin carrier/protector there were different reasons given. Firstly it is

difficult to find something that fits and still looks ok and doesn’t cost a bunch, and secondly it

is not such a huge problem that you would spend days searching for a solution.

After finishing the workshop the participants were asked about the Libresse casing that has

come out on the market recently. All but one (36-50) had heard of or seen it, one of the 12 to

20s had one in her purse. It was universally agreed that it was too poor quality in the metal,

the colour made it look cheap and since the couloring is so bright (and it has LIBRESSE

inscripted on one side) it defeats part of the purpose with a part of the product idea. However,

it is functional and it is for free. 3 out of 7 of the younger participants still felt sure they would

pay for a better design and quality (1 12-20, 1 21-35, 1 36-50), 2 was unsure (1 21- 35, 1 36-

50), the 1 between 51 and 65 still did not think she would use it even though it was for free

and 1 thought she would stick with the free alternative for sure (12-20).


90

Appendix F – Result of quantitative survey

Income/Age 12-20 21-35 36-50 51-65 sum %

-1 2 5 7

1-2 3 14 2 1 20

2-3 1 7 9 2 19

3-4 15 15 1 31 Dependant

4-5 5 8 13 Real 27,1

5 1 1 95% 24,996

sum 6 47 34 4 91 DgF 15

Income/Age 12-20 21-35 36-50 51-65 sum

-1 2,2% 5,5% 0,0% 0,0% 7,7%

1-2 3,3% 15,4% 2,2% 1,1% 22,0%

2-3 1,1% 7,7% 9,9% 2,2% 20,9%

3-4 0,0% 16,5% 16,5% 1,1% 34,1%

4-5 0,0% 5,5% 8,8% 0,0% 14,3%

5 0,0% 1,1% 0,0% 0,0% 1,1%

sum 6,6% 51,6% 37,4% 4,4% 100,0%

Interest/Income 1 1-2 2-3 3-4 4-5 5 sum Independant %

yes 6 19 16 28 12 1 82 Real: 1,61

no 1 1 3 3 1 9 95%: 11,07

sum 7 20 19 31 13 1 91 DgF:5

Interest/Income 1 1-2 2-3 3-4 4-5 5 sum

yes 6,6% 20,9% 17,6% 30,8% 13,2% 1,1% 90,1%

no 1,1% 1,1% 3,3% 3,3% 1,1% 0,0% 9,9%

sum 7,7% 22,0% 20,9% 34,1% 14,3% 1,1% 100,0%

Educ./Age 12-20 21-35 36-50 51-65 sum

Gym 4 12 19 3 38

Bac 25 10 1 36 Dependant

Mas 12 5 17 Real: 33,1

Oth 1 1

95%:

16,919

sum 5 49 34 4 92 DgF: 9


91

Educ./Age 12-20 21-35 36-50 51-65 sum

Gym 4,3% 13,0% 20,7% 3,3% 41,3%

Bac 0,0% 27,2% 10,9% 1,1% 39,1%

Mas 0,0% 13,0% 5,4% 0,0% 18,5%

Oth 1,1% 0,0% 0,0% 0,0% 1,1%

sum 5,4% 53,3% 37,0% 4,3% 100,0%

Interest/Educ. gym bac mast oth sum Dependant

yes 32 34 17 0 83 Real 13,3

no 6 2 0 1 9 95% 7,815

sum 38 36 17 1 92 DgF 3

Family/Age 12-20 21-35 36-50 51-65 sum %

1 3 18 4 1 26

2 2 22 5 1 30 Dependant

3 6 16 2 24 Real 29,8

4 1 3 9 0 13 95% 16,919

sum 6 49 34 4 93 DgF 9

Family/Age 12-20 21-35 36-50 51-65 sum

1 3,2% 19,4% 4,3% 1,1% 28,0%

2 2,2% 23,7% 5,4% 1,1% 32,3%

3 0,0% 6,5% 17,2% 2,2% 25,8%

4 1,1% 3,2% 9,7% 0,0% 14,0%

sum 6,5% 52,7% 36,6% 4,3% 100,0%

Situation/Age 12-20 21-35 36-50 51-65 sum %

Student 4 21 1 26

Employed 1 24 30 2 57

Homem 2 1 3 Dependant

Retired 1 1 Real 55,9

Not empl 1 4 1 6 95% 21,026

sum 6 49 34 4 93 DgF 12

Situation/Age 12-20 21-35 36-50 51-65 sum

Student 4,3% 22,6% 1,1% 0,0% 28,0%

Employed 1,1% 25,8% 32,3% 2,2% 61,3%

Homem 0,0% 0,0% 2,2% 1,1% 3,2%

Retired 0,0% 0,0% 0,0% 1,1% 1,1%

Not empl 1,1% 4,3% 1,1% 0,0% 6,5%

sum 6,5% 52,7% 36,6% 4,3% 100,0%


92

Price/Age 12-20 21-35 36-50 51-65 sum %

25-50 4 10 8 1 23

50-75 2 27 18 1 48

76-100 9 7 1 17

101-125 1 1 2 Independant

126-150 1 1 Real 18,8

Other 1 1 2 95% 24,996

sum 6 49 34 4 93 DgF 15

Price/Age 12-20 21-35 36-50 51-65 sum

25-50 4,3% 10,8% 8,6% 1,1% 24,7%

50-75 2,2% 29,0% 19,4% 1,1% 51,6%

76-100 0,0% 9,7% 7,5% 1,1% 18,3%

101-125 0,0% 1,1% 1,1% 0,0% 2,2%

126-150 0,0% 1,1% 0,0% 0,0% 1,1%

Other 0,0% 1,1% 0,0% 1,1% 2,2%

sum 6,5% 52,7% 36,6% 4,3% 100,0%

Irritation/Age 12-20 21-35 36-50 51-65 sum Independant %

yes 5 35 22 1 63 Real 2,59

no 1 14 11 2 28 95% 7,815

sum 6 49 33 3 91 DgF 3

Irritation/Age 12-20 21-35 36-50 51-65 sum

yes 5,5% 38,5% 24,2% 1,1% 69,2%

no 1,1% 15,4% 12,1% 2,2% 30,8%

sum 6,6% 53,8% 36,3% 3,3% 100,0%

Interest/Age 12-20 21-35 36-50 51-65 sum Dependant %

yes 6 45 30 2 83 Real 8,14

no 4 3 2 9 95% 7,815

sum 6 49 33 4 92 DgF 3

Interest/Age 12-20 21-35 36-50 51-65 sum

yes 6,5% 48,9% 32,6% 2,2% 90,2%

no 0,0% 4,3% 3,3% 2,2% 9,8%

sum 6,5% 53,3% 35,9% 4,3% 100,0%


93

Need/Age 12-20 21-35 36-50 51-65 sum

High 5 33 24 1 63 Independant

med 1 13 7 1 22 Real 4,97

no 3 2 1 6 95% 12,592

sum 6 49 33 3 91 DgF 6

Need/Age 12-20 21-35 36-50 51-65 sum

High 5,5% 36,3% 26,4% 1,1% 69,2%

med 1,1% 14,3% 7,7% 1,1% 24,2%

no 0,0% 3,3% 2,2% 1,1% 6,6%

sum 6,6% 53,8% 36,3% 3,3% 100,0%

Within age – groups

Income/Age 12-20 21-35 36-50 51-65

-1 33,3% 10,6% 0,0% 0,0%

1-2 50,0% 29,8% 5,9% 25,0%

2-3 16,7% 14,9% 26,5% 50,0%

3-4 0,0% 31,9% 44,1% 25,0%

4-5 0,0% 10,6% 23,5% 0,0%

5 0,0% 2,1% 0,0% 0,0%

sum 100,0% 100,0% 100,0% 100,0%

Interest/Income 1 1-2 2-3 3-4 4-5

yes 85,7% 95,0% 84,2% 90,3% 92,3%

no 14,3% 5,0% 15,8% 9,7% 7,7%

sum 100,0% 100,0% 100,0% 100,0% 100,0%

Educ./Age 12-20 21-35 36-50 51-65

Gym 80,0% 24,5% 55,9% 75,0%

Bac 0,0% 51,0% 29,4% 25,0%

Mas 0,0% 24,5% 14,7% 0,0%

Oth 20,0% 0,0% 0,0% 0,0%

sum 100,0% 100,0% 100,0% 100,0%

Interest/Educ. gym bac mast oth sum

yes 34,8% 37,0% 18,5% 0,0% 90,2%

No 6,5% 2,2% 0,0% 1,1% 9,8%

sum 41,3% 39,1% 18,5% 1,1% 100,0%


94

Family 12-20 21-35 36-50 51-65

1 50,0% 36,7% 11,8% 25,0%

2 33,3% 44,9% 14,7% 25,0%

3 0,0% 12,2% 47,1% 50,0%

4 16,7% 6,1% 26,5% 0,0%

sum 100,0% 100,0% 100,0% 100,0%

Situation/Age 12-20 21-35 36-50 51-65

Student 66,7% 42,9% 2,9% 0,0%

Employed 16,7% 49,0% 88,2% 50,0%

Homem 0,0% 0,0% 5,9% 25,0%

Retired 0,0% 0,0% 0,0% 25,0%

Not empl 16,7% 8,2% 2,9% 0,0%

sum 100,0% 100,0% 100,0% 100,0%

Price/Age 12-20 21-35 36-50 51-65

50 66,7% 20,4% 23,5% 25,0%

50-75 33,3% 55,1% 52,9% 25,0%

76-100 0,0% 18,4% 20,6% 25,0%

101-125 0,0% 2,0% 2,9% 0,0%

126-150 0,0% 2,0% 0,0% 0,0%

Other 0,0% 2,0% 0,0% 25,0%

sum 100,0% 100,0% 100,0% 100,0%

Irritation/Age 12-20 21-35 36-50 51-65 sum

yes 83,3% 71,4% 66,7% 33,3% 254,8%

no 16,7% 28,6% 33,3% 66,7% 145,2%

sum 100,0% 100,0% 100,0% 100,0% 400,0%

Interest vs age 12-20 21-35 36-50 51-65

yes 100,0% 91,8% 90,9% 50,0%

no 0,0% 8,2% 9,1% 50,0%

Appendix G – Partial customer segmentation analysis

Investigating the variables age and income closer shows that almost 7% of the asked in the

survey is aged between 12 and 20 years old and lies within the three lower income classes

(<100k, 1-200k & 2-300k). Considering that most in that age are students this is not deemed

abnormal. The age group between 21and 35 represents more than 50% of the surveyed and

the income is spread out over lower and higher middle income levels while the 36-50 which


95

carries 37% of the total survey keeps mostly in the middle income class. The 51-65

represented by less than 5% in the study is spread between the mid to lower regions of the

income chart. Applying chi-square to these variables dependence have been confirmed (DgF:

15, 95%: 24,996, real: 27, 1) so the finding is statistically viable. Though the younger

segments are in the lower parts of the income scale does not necessarily make them

unattractive segments. The Lady Case is not a high-value item, but it is an accessory and the

younger segments are more prone to spending money on fashion-accessories and the like than

the older segments188. Not because they don’t care but usually because they have a lot of other

expenses to deal with like a house, a car or children before they go shopping for themselves.

This indicates that the younger segments are still more attractive as target consumers.

Moving on to age versus education the group 12-20 has mostly completed a gymnasial

education, which fits with the age and school system in Denmark. The 21-35 holds mostly

bachelors and the remaining 26% is evenly divided between gymnasial and master degrees.

Of the surveyed more than 20% is between 36 and 50 and has a gymnasial education, and

more than 10% in the same age group holds a bachelor degree. Finally the 51-65s carries a

high representation of the gymnasial educated in their age group however overall it is only 3%

that fits this criterion in the total survey. Also here the chi-square has confirmed a statistical

dependence (DgF: 9, 95%: 16,919 real: 33, 1). It is important to note that this is just a snap-

shot of the situation at this moment for the surveyed women, many of the participants are still

young and still in the educational system so even though they are listed as having completed a

gymnasial education does not mean that it is so in two years. However, looking within the

age-groups it is evident that many of the 21 to 35 have attended higher education with over

50% holding a bachelor grade (and 24, 5% a master degree ) while the same is true for less

than 30% of the 36 to 50s and 25% of the 51 to 65s.

Looking at age set up against number of family members it confirms (DgF: 9, 95%: 16,919

real: 29,8 ) and reveals that just about 3 % of the surveyed are between 12 and 20 and live

alone while the other 3% lives with two or four family members. Furthermore almost 20% is

between 21 and 35 and lives alone, while more than 23% lives with someone else. About 10%

in the same age group lives with 3 or 4 or more people. Almost 20 % of the women asked are

between 36 and 50 and lives in a household with 3 people, this is followed by almost 10%

living with 4 and the last 10% evenly divided between 1 and 2 people in the household. The

188 Kotler, Marketing Management, 2003


96

4% represented in the age between 51 and 65 is quite evenly distributed between 1, 2 and 3

people living in the same home. In short this indicates that the younger segments are poled

around 1 or 2 people in the household and the older segments consists more of larger

households but still have a spread over the single and double family unit.

Examining the correlation between age and situation the survey results confirms that most of

the 12-20s are students (DgF: 12, 95%: 21,026, real: 55, 9), and the 21-35 are split pretty

evenly between being a student and being employed. In both sections there are a few un-

employed members. Looking at the group aged between 36 and 50 it holds about 37% of the

surveyed women whereof more than 32% are employed. The answers fitting with the group

aged between 51 and 65 are quite evenly spread between employed, homemaker and retired.

Comparing age against price it is obvious that the age group between 12 and 20 is price-

sensitive, of the 6% represented in the survey over 4% would pay the lowest alternative given

for the product; between 25 and 50 DKK. The last part would pay from 51 to 75 DKK for the

Lady Case. In the group of 21-35 29% of the surveyed would consider paying 51 to 75 DKK

and the rest is divided between the price groups 25-50 and 76-100 DKK. 19, 4% are between

36 and 50 and also lies in the price range of 51 to 75 DKK and continues to follow the pattern

of the younger group. The final 4% in the group aged 51-65 are spread from 25 to 100 DKK.

It should be noted that no dependence was found when employing the chi-square test (DgF:

15, 95%: 24,996 real: 18, 8). The findings of the workshop survey supports the price statistics

to a large extent where the group 21 to 35 feels 51-75 DKK is an acceptable price for the

Lady Case, and the 12 to 20s and actually also the 36 to 50s are more price sensitive and lies

spread between 25 and 75 DKK. There is no information regarding the 51 to 65s in this study.

According to the measurements the age-group 21 to 35 seems to be prepared to pay a

consistently higher price for a product like the Lady Case. However, as with the quantitative

survey there are some statistical insecurities with this sample (FHF, P=0, 47, two tailed).


97

Appendix H – Prototype picture

Prototype picture of the Lady Case


98

Appendix I – Price level 50 & 75 discussion

This means that a recommended sales price of 75 DKK for an end-seller marking up 35%

consist of 15 DKK VAT. About 15, 5 DKK belongs to the end-seller, and after the cost of

production has been deducted 26, 5 DKK per unit, before tax, is left for the entrepreneur to

reinvest and cover for the work done, money invested and risks taken. To reach the end-sales

price of 75 DKK a price of 44, 50 DKK per unit would be needed from the end-seller. At a

recommended sales price of 50dkk, VAT is 10 dkk, the mark-up is about 10, 5 dkk and after

costs are deducted 11, 7 dkk per unit is left to the entrepreneur. At 50 DKK end sales-price a

price of 29, 50 per unit is necessary to receive from the end-seller (e.g. Matas). Should all

40.000 units be sold this would yield about 1.060.000 at 44, 50 DKK per unit and about

470.000 at 29, 50 DKK per unit, all before taxes. It is vital to keep in mind that the profit from

the Lady Case needs to fund not only the salary and risks-taking of the entrepreneur, but also

the continued product procurement, growth of the venture through investments and

commitment. The plowback rate of a newly started enterprise needs to be kept high to ensure

enough liquidity when expanding both product-lines and market size. In this case, based on

the cost of material, it is feasible to assume that 100% needs to be reinvested to be able to

sustain operations and growth through the first year. Looking at the reinvestment need it must

cover the cost of future procurement and additional cost of capital needs. This indicates that

after 20.000 units sold the reinvestment should ideally lie around minimum 300.000 DKK or

above if the start-up is to expand. This indicates that the 50 DKK end sales-price at 20.000

would have earned about 235.000 DKK which would be enough to pay for the next batch of

products but it would limit the growth potential of the Lady Case since there would be almost

no money beyond the payment of new units from the factory to sell.


99

Appendix J – Marketing budget plan

The marketing budget is set to 100.000 DKK to begin with and has been planned to attempt to

generate as much awareness and reach as possible within the frames of the budget with the

framework of Kotler in mind189. Starting with the homepage, it will be allowed and expense

of 30.000 DKK, including internet and maintenance related costs. The actual cost for a

homepage with maintenance would normally be higher, however the entrepreneur can in this

case acquire a newly built professional website through contacts and this keeps the costs

down. 10.000 DKK is put aside for improving the packaging of the product itself and 20.000

DKK is employed to craft stands for the Lady Case to make sure it is visible to the consumer

in the store; it is assumed this amount will more than well cover the development and

manufacturing of these. Again the above must be cleared with the end-seller before executing.

The intention of the stand is not only to ensure exposure but also to show how the product is

to be used through exhibitions. To give away the product in the first week of launch to

increase awareness was considered, however the expenditure in relation to the potential future

sales effect was deemed to be too high. Finally, the remaining 40.000 DKK will be used for

an add (1 ½ page or 2 smaller) in Eurowoman, which is one of Denmark’s most read fashion

magazine for women between 20 an 40 years old with about 170.000 readers monthly190. This

amount would cover both the development of the ad and the advertisement space in the

magazine. If possible, the ad would be put close to or joined in with other accessories to

create a more solid look of design and fashion.

Appendix K – Cash needs year 1

Cas needs year 1-part

two

28

00

0 sold

Receiva

bles

end

year 157500

DK

K

Asian

order order 20000

Delivery

20000

Store

order

30

00

30

00

30

00

30

00

3000

40

00

189 Kotler, Marketing Management, 2003 190 Eurowoman, E-resource, 2009


100

Nr of

casings

sold

25

00

30

00

35

00

35

00

4000

45

00

7 8 9 10 11 12

-

20

00

Wareho

using

-

20

00

Wareho

using

-

20

00

Wareho

using

-

20

00

Wareho

using -2000

Wareho

using

-

20

00

Wareho

using

-

21

00 Interest

-

21

00 Interest

-

21

00 Interest

-

21

00 Interest -2100 Interest

-

21

00 Interest

-

10

00

Marketi

ng-

homep

age

-

10

00

Marketi

ng-

homep

age

-

10

00

Marketi

ng-

homep

age

-

10

00

Marketi

ng-

homep

age -1000

Marketi

ng-

homep

age

-

10

00

Marketi

ng-

homep

age

-

12

50

E.

Expens

es

-

12

50

E.

Expens

es

-

12

50

E.

Expens

es

-

12

50

E.

Expens

es -1250

E.

Expens

es

-

12

50

E.

Expens

es

-

83

3

Accoun

tant

-

83

3

Accoun

tant

-

83

3

Accoun

tant

-

83

3

Accoun

tant -833

Accoun

tant

-

83

3

Accoun

tant

-

10

00

0 Unforseen expenses

-

17

40

00

Cash need

-

71

83

-

18

11

83

-

17

18

3

-

71

83

-7183

-

71

83

Sales

87

50

0

87

50

0

10

50

00

12

25

00

122500

14

00

00

35 dkk per

casing- 30

days net

Initial

investment

Bankloan

Equity

Free cash

22

09

19

12

72

36

21

50

53

33

03

70 445687

64

05

50 EBIT


101

Cash needs

year 1

Asian

order

Ord

er

payment Delivery

Store

order

Deli

very 16.000

50

0

10

00

200

0

Nr of

Q sold

100

0

15

00

20

00

250

0

1

2

3

4

5

6

-

500

0 Casings

-

200

0

Wareh

ousing

-

20

00

Wareh

ousing

-

20

00

Wareh

ousing

-

200

0

Wareh

ousing

-

200

00 Contracts

-

210

0 Interest

-

21

00 Interest

-

21

00 Interest

-

210

0 Interest

-

300

00

Marketing

-

packaging

/stands

-

200

00

Marke

ting-

home

page

-

410

00

Marketi

ng Ad +

comput

er

-

10

00

Marketi

ng-

homep

age

-

10

00

Marketi

ng-

homep

age

-

100

0

Marketi

ng-

homep

age

-

125

0

E.

Expenses

-

125

0

E.

Expen

ses

-

125

0

E.

Expens

es

-

12

50

E.

Expens

es

-

12

50

E.

Expens

es

-

125

0

E.

Expens

es

-

833

Accounta

nt -833

Accou

ntant -833

Accoun

tant

-

83

3

Accoun

tant

-

83

3

Accoun

tant

-

833

Accoun

tant

-

100

00

Unf.

expenses

-

500

00

IT

syste

ms

-

200

00 Moulds

-

174

000

Payme

nt for

20.000

casing

s

Cash

need

-

870

83

-

246

083

-

471

83

-

71

83

-

71

83

-

718

3

Sales

35

00

0

52

50

0

700

00

Initial

invest

ment

Banklo

an

210

000

Equity

175

000


102

Free

cash

879

17

518

34

465

1

32

46

8

77

78

5

140

602 Page 99

Appendix L – Cash flow

The Statement of Cash-flow:

Cashflow statement Year 1 Year 2 Year 3

Cash provided by operations

Net income

kr.

464.662,50

kr.

884.325,00

kr.

1.031.062,50

Noncash expenses

Depreciation

kr.

70.000,00

kr.

50.000,00

kr.

50.000,00

(Accounts Recievable)

kr. -

157.500,00

kr. -

140.000,00

kr. -

175.000,00

(Inventory change)

kr. -

143.500,00

kr. -

30.450,00 kr. -

Cash provided by operations

kr.

233.662,50

kr.

763.875,00

kr.

906.062,50

Cashflows from investment

Property/plant investments

kr. -

20.000,00

kr.

- kr. -

Marketing investment

kr. -

100.000,00

kr.

- kr. -

IT systems

kr. -

50.000,00

Cash provided by investments

kr. -

170.000,00

kr.

-

kr.

-

Cash from financing activities

Owners investment

kr.

175.000,00

Addition to Long-term debt

kr.

210.000,00

kr. -

52.500,00

kr. -

52.500,00

(Reduction in long-term debt)

kr.

-

Cash provided by financing

kr.

385.000,00

kr. -

52.500,00

kr. -

52.500,00

Change in cash balance

kr.

448.662,50

kr.

711.375,00

kr.

853.562,50


103

Appendix M – Income Statement

The Income Statement:

Income

statement End-year 1 End-year 2 End-year 3

Net Sales

kr.

980.000,00

kr.

1.697.500,00

kr.

2.100.000,00

Cost of Goods sold

kr. -

348.000,00

kr. -

452.400,00

kr. -

696.000,00

Inventory correction

kr.

143.550,00

kr.

174.000,00

kr.

174.000,00

Selling & general expenses

Marketing

kr. -

100.000,00

kr. -

100.000,00

Warehouse

kr. -

20.000,00

kr. -

24.000,00

kr. -

24.000,00

Other expenses

kr. -

15.000,00

kr. -

15.000,00

kr. -

15.000,00

Accountant

kr. -

10.000,00

kr. -

10.000,00

kr. -

10.000,00

Depreciation (Moulds, IT & Marketing)

kr. -

70.000,00

kr. -

50.000,00

kr. -

50.000,00

Unforseen expenses

kr. -

20.000,00

kr. -

20.000,00

kr. -

20.000,00

Earnings before interest and taxes

kr.

640.550,00

kr.

1.200.100,00

kr.

1.359.000,00

(EBIT)

Net interest expense

kr. -

21.000,00

kr. -

21.000,00

kr. -

15.750,00

Taxable income

kr.

619.550,00

kr.

1.179.100,00

kr.

1.374.750,00

Taxes

kr. -

154.887,50

kr. -

294.775,00

kr. -

343.687,50

Net income *

kr.

464.662,50

kr.

884.325,00

kr.

1.031.062,50

& Additions to retained earnings


104

Appendix N – Balance Sheet

The Balance sheet year 1 to 3:

Consolidated Balance sheet in DK Kroner

Assets

Year 1 Year 2 Year 3

Current Assets

Cash and Equivalents kr. 388.662,50 kr. 1.287.487,50

kr.

2.311.050,00

Receivables kr. 157.500,00 kr. 140.000,00

kr.

175.000,00

Inventories kr. 143.500,00 kr. 174.000,00

kr.

174.000,00

Other current assets-

Marketing kr. 100.000,00 kr. 60.000,00

kr.

30.000,00

Less Depriciation kr. -40.000,00 kr. -30.000,00

kr. -

30.000,00

Net other current assets kr. 60.000,00 kr. 30.000,00

kr.

-

§ Total current assets kr. 809.662,50 kr. 1.661.487,50

kr.

2.660.050,00

Fixed Assets

Equipment kr. 20.000,00 kr. 10.000,00

kr.

5.000,00

Less accumulated

depreciation kr. -10.000,00 kr. -5.000,00

kr. -

5.000,00

Net Equipment kr. 10.000,00 kr. 5.000,00 No residual value

Other assets-IT systems kr. 50.000,00 kr. 30.000,00

kr.

15.000,00

Less accumulated

depreciation kr. -20.000,00 kr. -15.000,00

kr. -

15.000,00

Net Other assets IT-System kr. 30.000,00 kr. 15.000,00 No residual value

§ Total fixed assets kr. 40.000,00 kr. 20.000,00

kr.

-

Total assets kr. 849.662,50 kr. 1.681.487,50

kr.

2.660.050,00


105

Consolidated Balance sheet in DK Kroner

Liabilities and Owners Equity

Year 1 Year 2 Year 3

Current Liabilities

Debt due to payment kr. 52.500,00

kr.

52.500,00

kr.

52.500,00

Accounts payable kr. -

kr.

-

kr.

-

Other current liabilities

§ Total current liabilities kr. 52.500,00

kr.

52.500,00

kr.

52.500,00

Longterm debt

Other long-term

liabilities kr. 157.500,00

kr.

105.000,00

kr.

52.500,00

Total liabilities kr. 210.000,00

kr.

157.500,00

kr.

105.000,00

Equity

Owners equity kr. 175.000,00

kr.

175.000,00

kr.

175.000,00

Paid-in capital

Retained earnings kr. 464.662,50

kr.

884.325,00

kr.

1.031.062,50

Total retained earnings kr. 464.662,50

kr.

1.348.987,50

kr.

2.380.050,00

§ Total owners equity kr. 639.662,50

kr.

1.523.987,50

kr.

2.555.050,00

Total liabilities and

equity kr. 849.662,50

kr.

1.681.487,50

kr.

2.660.050,00


106

Appendix O – SWOT

SWOT

Srengths

- Good product idea

- High profit margin possible

- Piggy-backing on existing, popular and necessary products

- Clear concept

Weaknesses

- Difficult to get broad customer access through own distribution

- Capital intensive if stock is held

- No awareness of product

Opportunities

- World market potential

- Further product development

- Product differentiation

- No direct competitors

Threats

- Possible competitors (conglomerates, retail-chains etc)

- Indirect competitors, like “The Diva Cup” increases its market share considerably

- Accessories goes out of fashion, “back to the 60´s”

- Change in packaging of sanitary towels or tampons

- Change in political climate or commerce rules both national and international

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